The EUR/USD currency pair has rebounded early Thursday, recovering some of the losses from Wednesday’s sharp decline. Despite this recovery, further gains may be constrained if risk aversion intensifies, potentially driving increased demand for the safe-haven US Dollar (USD).
Market sentiment remains cautious following Nvidia’s disappointing sales forecast and heightened anticipation ahead of key economic data releases.
Germany is expected to release its preliminary inflation data, while the US will provide its second estimate of Gross Domestic Product (GDP) later today.
Technical Analysis
From a technical standpoint, the EUR/USD uptrend remains valid as long as the support level at 1.1107 holds. This level represents the 23.6% Fibonacci Retracement (Fibo) of the August rally, which saw the pair rise from 1.0775 to a 13-month high of 1.1202.
The 14-day Relative Strength Index (RSI) remains robust, currently at 63, indicating continued bullish potential for the pair.
For the EUR/USD to challenge the yearly high of just above 1.1200, the pair needs to close above the psychological level of 1.1150 on a daily basis. The previous high of 1.1186 may also come into play, potentially testing bearish positions.
Conversely, a sustained drop below the 1.1107 support could expose the pair to further declines, with the 38.2% Fibonacci level at 1.1045 becoming the next target. Should this support fail, immediate assistance may be found at the 21-day Simple Moving Average (SMA) of 1.1026, with further declines possibly testing the 1.1000 level.
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