The EURUSD currency pair is navigating a tumultuous path, currently trading 21 basis points lower week-to-date and teetering on the brink of a third consecutive week of losses.
Plummeting to its lowest point in five weeks, the pair reflects escalating downward pressures driven by recent market dynamics. Last week’s surprise rate cut by the Swiss National Bank, coupled with dovish sentiments pervading major European economies, spurred a rush for the Greenback.
This week, the U.S. Dollar gained traction following Fed Governor Christopher Waller’s remarks, signalling a cautious approach to policy rate adjustments amidst persistent inflation concerns. With all eyes eagerly awaiting the release of the U.S. PCE Price Index, the Federal Reserve’s favoured inflation gauge, on Friday, anticipation mounts as traders seek insights into potential rate cut implications for June. This pivotal event holds the promise of shaping the future trajectory of the EURUSD pair, amplifying the significance of market reactions and strategic positioning in response to evolving economic dynamics.
Technical
The EURUSD currency pair remains entrenched in a downtrend, as evidenced by its position below the 100-day moving average and the formation of a descending channel pattern.
Recent selling pressures, notably at the 1.09425 level amidst overbought RSI conditions, underscore the prevailing bearish sentiment. However, with current oversold RSI conditions and a decline in downside volumes, the downward momentum may temporarily abate.
In the event of a resurgence in upside momentum, attention could turn to the 100-day moving average as a potential point of interest. Conversely, continued selling pressure could bring into play support at the 1.07320 level, aligning with a 40-day low. Market sentiment remains crucial, with traders closely monitoring technical indicators for cues on potential price movements in the EURUSD pair.
Summary
Amidst the Greenback’s resurgence, the EURUSD grapples with downward pressure, nearing a third week of losses. Technical indicators suggest potential resistance at the 100-day moving average, while support lies at the 1.07320 level. Traders await the US PCE Price Index for insights into June rate cut possibilities.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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