Title: EUR/USD Price Forecast: Sustained Bullish Momentum Suggests Further Upside Potential
Author: Original analysis by Pablo Piovano, FXStreet
EUR/USD continues its upward trajectory as bullish sentiment dominates the market. The currency pair has shown resilience in the face of fluctuating U.S. data and evolving central bank expectations. In this extended analysis, we revisit the current technical outlook, market dynamics, and likely future direction for the EUR/USD exchange rate, based on the original work by Pablo Piovano at FXStreet.
Technical Overview: EUR/USD Holds Firmly Above Key Support
The EUR/USD pair has extended its recent gains, bolstered by technical strength on the daily chart and continued investor optimism. The pair’s upside momentum, which began building at the start of recent sessions, remains robust.
Key technical observations include:
– EUR/USD remains on a firm bullish track, trading near multi-day highs in the 1.0870-1.0880 region as of the latest session.
– The 200-day Simple Moving Average (SMA), currently positioned around 1.0830, continues to act as a support level. The price’s consistent closeness to this long-term indicator reinforces the bullish bias.
– Short-term moving averages, such as the 20-day and 50-day SMAs, are also sloping upward, providing extra confirmation that the pair may see continued bullish action.
– Momentum on the Relative Strength Index (RSI) is not yet overbought, suggesting further room for an upward move in the coming days.
Short-Term Resistance and Support Levels
The EUR/USD pair will likely attempt to challenge immediate resistance zones, which could act as a catalyst for significant moves. These levels include:
– Immediate resistance is found at the 1.0900 psychological level. A clear break above this could potentially open the path to 1.0940 and then 1.1000.
– Above 1.1000, the next significant barrier is located at 1.1040, a level observed as a mid-June swing high.
– On the downside, support continues to rest at 1.0830, in line with the aforementioned 200-day SMA.
– Should bearish pressure increase, further downside targets include 1.0780 and potentially the 1.0700 zone.
These technical levels are crucial for traders assessing swing trade opportunities or looking to manage intraday positions.
Macroeconomic Overview: Euro Zone and U.S. Outlook Diverging
The relative strength of the Euro in recent sessions can be attributed to differences in economic performance and expectations between the Eurozone and the United States.
Key macroeconomic points influencing EUR/USD include:
– In the Eurozone, inflation readings have shown mixed signals, but the European Central Bank (ECB) has remained cautious in guiding its monetary policy outlook. A pause in rate hikes, combined with relatively steady economic indicators, supports a more stable Euro.
– Recent soft data from the U.S. economy, including weaker-than-expected labor market data and retail sales figures, have heightened expectations that the Federal Reserve could ease policy sooner than anticipated. This has applied pressure on the U.S. Dollar.
– Central bank divergence is now emerging as a key theme. While both the ECB and the Fed are cautious, markets perceive a greater likelihood of the Fed adopting a more dovish path in the second half of the year, a scenario that undermines the Greenback’s strength relative to the Euro.
– Comments from Fed officials suggest increased flexibility, emphasizing the importance of data-dependency. If inflation softens further, this could favor rate cuts by year-end.
– ECB policymakers, meanwhile, are maintaining a wait-and-see approach. Market participants are carefully watching for signs of further rate hikes or a pivot toward normalization.
Market Sentiment and Positioning
Investor flows into the Euro have picked up amid weaker U.S. Dollar sentiment. According to speculative positioning data:
– CFTC’s Commitment of Traders report indicated that
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