EUR/USD Weakens Amidst Dollar Strength
- The EUR/USD pair is trading around 1.0965 in the early European session, marking the seventh consecutive day of negative territory.
- US Dollar (USD) strength is putting pressure on the pair, with recent US jobs data leading traders to reconsider expectations of a 50 bps Fed rate cut in November.
- Key support and resistance levels for the pair are at 1.0881 and 1.1000 respectively.
In the early hours of Monday’s European session, the EUR/USD pair continues to weaken, currently hovering around 1.0965 for the seventh straight day. The ongoing pressure on the pair can be attributed to the strengthening US Dollar (USD), driven by the latest US jobs data released on Friday. This data has prompted traders to reassess their expectations regarding a potential 50 basis points (bps) rate cut by the Federal Reserve in November.
Technical Analysis and Outlook
Looking at the daily chart, the bullish outlook for EUR/USD appears fragile as the pair lingers near the crucial 100-day Exponential Moving Average (EMA). A decisive move below this level could signal a further downside bias for the pair. The Relative Strength Index (RSI) is currently below the midline at 37.55, indicating a downward momentum and suggesting that the path of least resistance is to the downside.
If the pair breaches the 100-day EMA at 1.0970, the next support level to watch is at 1.0881, which was the low point on August 8. A critical support zone lies between 1.0805-1.0800, encompassing the low from July 9 and the round figure mark.
On the upside, breaking above the psychological level of 1.1000 could open the door for further gains, potentially leading to a rally towards 1.1144 (the high from October 1) and eventually to 1.1223, which represents the upper boundary of the Bollinger Band.
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The Euro serves as the currency for 19 European Union countries within the Eurozone, making it the second most traded currency globally after the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover exceeding $2.2 trillion. Notably, the EUR/USD pair is the most heavily traded currency pair, comprising around 30% of all transactions.
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