Sat, May 18, 2024

EUR/USD Hits 1.0780: Rising Amid FOMC and CPI Events

dollar, euro, Ukraine, eur/usd

Quick Look:

  • Strong Technical Support: EUR/USD above key levels; 14-day EMA at 1.0752.
  • Bullish Breakout Potential: Resistance near 1.0800; exceeding it could reach 1.0885.
  • Important Economic Data: Upcoming CPI could weaken the USD, boosting the Euro.

The Euro experienced a significant recovery against the US Dollar during the Asian trading session on Tuesday. The EUR/USD pair climbed back to a current level of 1.0780. This recovery has brought into focus several technical and fundamental factors that could influence the currency pair’s trajectory in the coming weeks.

EUR/USD Support Level at 1.0752 and Rising Towards 1.0800

The EUR/USD pair has stabilised above several crucial support levels, which include the 14-day Exponential Moving Average (EMA) at 1.0752 and a psychological threshold at 1.0700. Other notable support levels are 1.0690, the lower boundary of the current symmetrical triangle pattern, followed closely by 1.0650, 1.0677, and 1.0611.

On the resistance side, the upper boundary of the symmetrical triangle is seen at 1.0800. Breaking past this level could open the way towards 1.0877 and April’s high at 1.0885. Further resistance is stationed at 1.0943, marking a critical barrier for continued upward movement.

Bullish MACD Trends: Positive Signals Above Signal Line

The Moving Average Convergence Divergence (MACD) indicates an upward momentum above the centerline. The divergence appeared above the signal line. This setup suggests that the MACD signal line might cross over the centerline. In that case, it will reinforce the bullish sentiment in market dynamics.

The Federal Open Market Committee (FOMC) rate decision from two weeks ago has been instrumental in forming a fresh upward trend for the EUR/USD. A weaker-than-expected Non-Farm Payroll (NFP) report has also contributed to re-testing the crucial 200-day moving average, thereby setting a monthly high for the currency pair.

The upcoming Consumer Price Index (CPI) release this Wednesday is poised to be a critical event. If the CPI data prints below expectations, it could trigger further weakness in the US Dollar and bolster hopes for a rate cut, supporting the Euro in the process.

Fibonacci Retracements Define EUR/USD’s Trading Band

The EUR/USD remains within the established trading range despite recent volatility. Fibonacci retracements have played a significant role, with the 38.2% marker catching the lows last month and the 50% marker forming resistance in March. The 61.8% retracement caught last year’s high, highlighting the importance of these levels in determining price actions.

Moreover, the currency pair is making another concerted effort to break above the 200-day moving average, a significant level first re-tested during the last CPI release on April 10th. The market has adhered to a clear pattern of risk-on scenarios following the FOMC and NFP events. This indicates a potential fast re-pricing if the upcoming CPI unsettles with an above-expected print.

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