Article Rewrite Based on Original Analysis by Pablo Piovano – FXStreet
Original source: EUR/USD bulls take the wheel, targeting higher levels today (FXStreet)
EUR/USD MARKET OVERVIEW
The EUR/USD currency pair began to show renewed bullish momentum in recent sessions, extending a recovery narrative as market conditions favored the euro over the U.S. dollar. Bullish interest took center stage during early European trading hours and continued to build as the session unfolded. Supported by moderating U.S. economic data and shifting expectations over future Federal Reserve policy moves, EUR/USD gained upward traction and began targeting new resistance levels.
MARKET SENTIMENT AND MACROECONOMIC BACKDROP
The euro’s advance was fortified by a combination of macroeconomic factors and changing sentiment in currency markets:
– Recent U.S. inflation readings, while not extremely disappointing, were tame enough to spark dovish speculation around the Federal Reserve’s policy stance.
– The eurozone’s data, though mixed, provided sufficient support for the single currency amid improving risk appetite.
– Investors adopted a “buy-on-the-dip” strategy for EUR/USD, especially after the pair held firm above key support levels early in the week.
– Risk flows entered the FX space, favoring higher-yielding or relatively undervalued currencies such as the euro.
With markets now gradually pricing in a later start to the Fed’s easing cycle and possibly fewer rate cuts, the dollar’s broad-based strength began to wane, allowing EUR/USD to reclaim lost ground.
TECHNICAL OUTLOOK
From a technical perspective, the pair’s outlook turned more constructive, with charts signaling potential for further short-term upside. The following key technical considerations are in play:
Upward Momentum Drivers:
– Recent price action saw EUR/USD break above the 1.0880 resistance level, marking a renewed upward trajectory.
– Bullish structure remains intact as long as the price remains above nearby support zones.
– Short-term moving averages have begun to tilt higher, signaling a shift in day-trading bias.
– MACD and RSI on intraday and 4-hour charts point toward continued upward momentum, though not yet overbought.
Immediate Resistance and Support:
– Initial resistance is seen at the 1.0910 region, which coincides with recent swing highs.
– A successful break above 1.0910 could open the door toward 1.0950 and potentially 1.1000 as the next target zones.
– On the downside, immediate support rests at 1.0860, followed by more significant buying interest around 1.0830.
– A break below 1.0830 would invalidate the current bullish setup and expose the pair to deeper losses toward 1.0780.
Key Technical Levels to Watch:
– Support Levels:
– 1.0860: minor support and intraday bounce zone
– 1.0830: previous consolidation area and Fib retracement level
– 1.0780: possible downside target if bullish momentum fades
– Resistance Levels:
– 1.0910: recent high and initial breakout barrier
– 1.0950: next upside target and upper bound of range
– 1.1000: psychological level and major resistance
FUNDAMENTAL CATALYSTS TO CONSIDER
The short-term directional bias in EUR/USD will continue to be heavily influenced by upcoming macroeconomic indicators, central bank commentary, and global risk sentiment. Traders should monitor the following:
Federal Reserve Outlook:
– Fed commentary remains pivotal. Any indication of dovish policy shifts may weigh on the dollar and boost EUR/USD.
– Next U.S. CPI, PPI, and labor market reports will play crucial roles in shaping rate expectations.
European Central Bank Dynamics:
– While the ECB maintains a cautious stance due to softening economic indicators, it is relatively less dovish compared to the Fed in the current cycle.
– Hawkish surprises from ECB members could strengthen
Explore this further here: USD/JPY trading.