EUR/USD Continues its Upward Trend
The EUR/USD pair extended its upward movement, approaching the key barrier of 1.0900, marking its fourth consecutive daily gain and challenging the critical 200-day Simple Moving Average (SMA) around 1.0870. This positive momentum indicates a shift in the currency pair’s trajectory.
Factors Influencing the Market
- Weakening US Dollar: The US Dollar’s rally has lost momentum, leading to the fourth daily decline in the US Dollar Index (DXY), which dipped below the 104.00 level. This subdued price action amidst lower US yields is contributing to the EUR/USD’s upward movement.
- Inflation Data: Inflation in the broader euro bloc remained stable in October, providing support for the Euro. Expectations of a rate cut by the Federal Reserve next month due to sticky PCE data and firm US labor market readings are also influencing market sentiment.
- Central Bank Actions: The European Central Bank (ECB) recently implemented a rate cut in line with expectations. ECB officials are cautious about further rate decisions, emphasizing the importance of upcoming economic data. Differing opinions within the ECB on rate cuts may impact future monetary policy.
Market Outlook and Technical Analysis
As the Fed and ECB assess their next moves, broader economic conditions will shape the trajectory of EUR/USD. The US economy’s current outperformance of the eurozone may support the USD in the short to medium term. Additionally, the outcome of the upcoming US presidential election could affect the strength of the Greenback.
EUR/USD Short-Term Technical Analysis
Looking at the technical indicators, extra gains in EUR/USD could lead the pair towards the weekly high of 1.0887, with further resistance levels at 1.0935 and 1.1019. On the downside, initial support levels are at 1.0760 and 1.0700. Clearing the 200-day SMA could signal a positive outlook for the pair.
On the four-hour chart, the rebound continues, with support levels at 1.0760 and 1.0666, and resistance levels at 1.0887, 1.0954, and 1.0996. The relative strength index (RSI) is around 60, indicating a moderate bullish sentiment.
Overall, the current market dynamics and technical analysis suggest a potential for further gains in EUR/USD, barring any significant changes in economic data or central bank policies.