August 22, 2024 at 06:00AM
It’s certainly one step at a time for EUR/USD this week with the pair having posted four straight days of gains coming into today. At first, it was about holding a break above 1.1000. Then, it was about challenging the December highs of 1.1123-39. Now, the pair might look even further towards its 2023 high of 1.1275 next.
So far this year, the pair has been trading in a range in between its 100 (red line) and 200-week (blue line) moving averages. But this week, buyers are looking to break out of that. The previous attempt in 2023 was halted by the 100-month moving average and that will be a focus point as well this time at 1.1220.
That alongside the 2023 high of 1.1275 will be key levels to watch in the weeks ahead for EUR/USD as buyers look to build on the latest upside momentum.
The push higher this week comes as the dollar is sinking across the board. Traders are pivoting away from the greenback now as they sense a more dovish Fed, anticipating that inflation is well under control in the US. Meanwhile, a worsening labour market will be a cause for concern that the Fed might have to cut rates at a quicker pace.
In that sense, they are banking on a divergence of sorts on the outlook for major central banks. Even if the others are also cutting rates, they may not feel as much urgency as the Fed might at the moment. Or at least in terms of the size of the moves.
As such, EUR/USD isn’t the only chart showing potential for a stronger breakout. GBP/USD and USD/CHF are the other obvious ones but even USD/CAD, AUD/USD, and NZD/USD are nearing key technical junctures that could spell more pain to come for the dollar.
This article was written by Justin Low at www.forexlive.com.
