The EURUSD currency pair has recently shown signs of resilience after experiencing a sell-off at the beginning of the year. Notably, it has embarked on a rebound, witnessing three consecutive weeks of gains, with the most recent week marking its largest weekly gain on record this year. This impressive rally has propelled the pair to a seven-week high.
The European Central Bank’s decision to maintain interest rates at record highs in March further bolstered the EURUSD pair, reinforcing the notion that borrowing costs will remain elevated for the foreseeable future. Additionally, softer-than-anticipated Jolts Job Openings data, coupled with comments from Fed Chair Powell hinting at potential rate cuts sometime in the year, contributed to the Greenback’s depreciation against major currencies, including the Euro.
As market participants eagerly await the release of U.S. CPI data today, there is heightened anticipation regarding its potential impact on market sentiment surrounding the likelihood of rate cuts. The outcome of this data release is poised to influence the trajectory of the EURUSD pair in the near term.
Technical
The EURUSD currency pair has experienced a notable shift in sentiment, indicating the market’s preference for the upside. This sentiment shift is corroborated by the pair’s crossing above the 100-day moving average and its trading pattern within an ascending channel.
Following a test of the channel’s lower boundary, the pair witnessed a surge in upside momentum, leading to the establishment of a support level at 1.07984. Subsequently, the pair soared to a seven-week high at 1.09812, albeit accompanied by overbought RSI conditions, which tempered the upward momentum.
In response, the pair retraced and tested the 38.20% Fibonacci Retracement level. Should bearish pressures persist, a breakdown below this level, particularly with high volume, could signal further downside potential, potentially targeting the 50% retracement level. Conversely, if the 38.20% level holds as an intermediate support, a bullish reversal could ensue, potentially leading to a retest of the 1.09812 resistance level.
Summary
The EURUSD pair demonstrates resilience, benefiting from U.S. rate cut prospects and the ECB’s stance on interest rates. With a bullish sentiment indicated by a break above the 100-day moving average and an ascending channel pattern, attention is on the 38.20% Fibonacci Retracement level as a pivotal point.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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