The EUR/USD pair is holding onto its gains after rebounding from the 1.0950 level, showing modest upward movement on Friday. However, the pair’s bullish momentum remains limited. As the European session unfolds, the pair trades around the 1.0985 mark, reflecting a slight daily increase of just over 0.10%.
The US Dollar (USD) is struggling to sustain the positive momentum it gained from Thursday’s robust US macroeconomic data, weighed down by expectations that the Federal Reserve may begin a rate-cutting cycle in September. Additionally, a positive sentiment in global equity markets is undermining the safe-haven appeal of the USD, providing some support to the EUR/USD pair.
From a technical standpoint, Thursday’s rebound from the 1.0950 level, now acting as support, is encouraging for bullish traders. Moreover, the daily chart’s oscillators remain in positive territory and are not yet signaling overbought conditions, suggesting that the path of least resistance for the EUR/USD is upward, with the potential for further gains.
A move beyond the psychological 1.1000 mark could pave the way for the EUR/USD pair to challenge the year-to-date (YTD) peak near the 1.1045-1.1050 region, reached on Wednesday. Continued buying interest beyond this level could serve as a catalyst for bullish traders, potentially driving the pair towards the 1.1100 mark for the first time since December 2023.
On the downside, the 1.0950 level, now acting as support, is expected to cushion any immediate declines, followed by support zones at 1.0920 and 1.0900. If the pair drops below the 1.0880 level, it could expose the 200-day Simple Moving Average (SMA), currently positioned around 1.0835, before potentially falling to the 1.0800 mark. This level aligns with the 100-day SMA and could act as a critical pivot point. A decisive break below this threshold would indicate a near-term top for the EUR/USD, shifting the bias towards a bearish outlook.
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