EUR/USD Extends Gains as Technical Indicators Point to Continued Strength
Original article by InvestingLive.com
The EUR/USD currency pair has recently displayed strong upward momentum, pushing toward fresh local highs as bullish sentiment continues to grow in the forex market. The pair’s rebound extends a broader recovery from previous lows recorded earlier in the trading session, capturing the interest of traders and investors noting the alignment of technical signals with broader macroeconomic developments.
This article will explore the recent rally of EUR/USD, provide a detailed technical analysis, and evaluate potential directions the pair could take in the near future.
Market Context and Overview
In recent sessions, the euro has shown resilience against the US dollar. This movement comes amid a backdrop of waning USD strength, easing inflation figures, and renewed expectations that the Federal Reserve might adopt a less aggressive monetary tightening stance in the upcoming months.
Contributing factors to recent EUR/USD strength:
– A mild retreat in the US dollar index, which has created space for the EUR/USD to appreciate.
– Lower-than-expected inflation readings in the United States, suggesting a potential pause in rate hikes from the Federal Reserve.
– Improving economic sentiment indicators across the eurozone, particularly in Germany and France.
– Technical momentum supported by bullish chart setups and the break of key resistance levels.
During intraday trading, EUR/USD climbed as high as the 1.1010 level, a significant area that now acts as a near-term resistance. The pair’s recent movement indicates growing market interest, reflecting a blend of technical and fundamental catalysts supporting the current uptrend.
Technical Analysis
As of the most recent chart review, EUR/USD continues to maintain a healthy bullish trend. Several technical indicators support the positive outlook for EUR/USD, suggesting the pair could extend its rally in the short to medium term.
Key technical highlights:
– Price Action:
– EUR/USD has broken out above the 1.0950 resistance zone, which has now flipped into support.
– Bulls stepped in decisively after the pair reclaimed the 50-day moving average — an important momentum signal for short-term traders.
– The pair is currently trading near its 3-week high, which solidifies the bullish momentum.
– Support and Resistance Levels:
– Immediate resistance lies at the psychological level of 1.1050.
– A break above 1.1050 could open a path to test the next resistance zone at 1.1100.
– On the downside, initial support is located at 1.0950, followed by further support at 1.0870.
– Moving Averages:
– The 20-day moving average has begun sloping upward, tracking the recent move higher and acting as dynamic support.
– The 50-day moving average is below the current price, confirming bullish alignment across the short and medium-term outlooks.
– The 200-day moving average remains safely below the price, reinforcing long-term bullish sentiment.
– Relative Strength Index (RSI):
– The RSI stands near 64 at the time of writing, approaching overbought territory, though not quite there yet.
– The indicator suggests strong momentum but also indicates that traders should watch for possible consolidation or minor pullbacks.
– MACD (Moving Average Convergence Divergence):
– The MACD line remains firmly above the signal line, and both lines are trending higher.
– Positive MACD histogram bars continue, indicating sustained bullish momentum.
Short-term Price Projections
Based on current technical and macroeconomic conditions, the near-term outlook for EUR/USD remains optimistic, though tempered by the risk of short-term retracements due to consolidation phases. However, the structural trend remains intact.
Key scenarios:
Bullish scenario:
– If EUR/USD manages to break and hold above 1.1050, the bullish momentum could gather pace.
– This would expose the next resistance levels:
– 1.1100 as psychological resistance.
– 1.1180 as the next
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