The EURUSD continues its upward trajectory despite last week's turbulence that shook the global financial markets. With upcoming US inflation data this week, the currency pair is poised to retest August's highest exchange rate. Traders will closely monitor the currency pair due to the release of significant economic data later in the week that could potentially impact the currency valuations.
Overview
The EURUSD continues its upward trajectory despite last week's turbulence that shook the global financial markets. With upcoming US inflation data this Tuesday and Wednesday, the currency pair is poised to retest August's highest exchange rate. Traders will closely monitor the currency pair due to the release of significant economic data later in the week that could potentially impact the currency valuations.
Key Economic Events
Tuesday 09:05 am (GMT+0) - Germany: ZEW Economic Sentiment Indicator (EUR)
Tuesday 12:30 pm (GMT+0) - USA: PPI m/m (USD)
Wednesday 09:00 am (GMT+0) - Europe: Employment Change q/q (EUR)
Wednesday 09:00 am (GMT+0) - Europe: GDP q/q (EUR)
Wednesday 12:30 pm (GMT+0) - USA: CPI m/m (USD)
Wednesday 14:30 (GMT+0) - EIA Crude Oil Stocks Change (USD)
Wednesday 22:45 (GMT+0) - New Zealand: Electronic Card Retail Sales m/ (NZD)
Wednesday 23:50 (GMT+0) - Japan: GDP q/q (JPY)
Thursday 01:30 am (GMT+0) - Australia: Employment Change (AUD)
Thursday 06:00 am (GMT+0) - UK: Manufacturing Production m/m (GBP)
Thursday 12:30 pm (GMT+0) - USA: Core Retail Sales m/m (USD)
Friday 06:00 am (GMT+0) - UK: Retail Sales m/m (GBP)
Friday 12:30 pm (GMT+0) - USA: Building Permits (USD)
Technical Analysis
The exchange rate between the Euro and the US Dollar peaked in August, reaching 1.10089 after the "black" Monday global economic turbulence that shook the financial markets.
The rally was primarily triggered by disappointing US labor force data, resulting in a 1.15% increase in EURUSD. Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator indicate an uptrend, with prices above the EMA and values above the 100 baseline. Furthermore, prices bounced off the Middle (20-period SMA) Bollinger Band, pointing to a potential upward rally.
Potential Upside Targets
If the bulls keep control of the market, traders may consider the following four potential upside targets:
1.09658: The first price target is 1.09658, which aligns with the (R1) resistance calculated using the weekly Pivot Points method.
1.10089: The second price target is seen at 1.10089, representing the peak marked on August 5.
1.10879: An additional resistance level is determined at 1.10879, corresponding to the 161.8% Fibonacci Extension attached to the daily high of 1.11089 and the daily low of 1.08813.
1.11150: The fourth resistance is established at 1.11150, representing the (R3) resistance estimated using the weekly Pivot Points method.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following four downside targets:
1.08813: The initial level of support is identified at 1.08813, corresponding to the 38.2% Fibonacci Retracement between the swing low of 1.06659 and the swing high of 1.10089.
1.08390: The second downside target is expected to be 1.08390, which corresponds to the 50% retracement between the swing low of 1.06659 and the swing high of 1.10089.
1.07774: The third line of support is estimated at 1.07774, which aligns with the trough marked on August 1.
1.06659: An additional support level is estimated at 1.06659, representing a daily low recorded on June 26.
Fundamentals
The Euro climbed to $1.10, reaching its highest point in seven months, as growing expectations that the Federal Reserve might pursue more aggressive rate cuts than the European Central Bank (ECB) weakened the dollar's appeal. Recent US economic data, which came in weaker than anticipated, has heightened speculation about imminent Fed rate reductions. While the ECB has already initiated easing measures with a quarter-point rate cut in June, market participants believe the Fed could take more decisive action. Despite facing domestic challenges, the Euro has remained resilient, particularly as concerns about the US economy's slowdown intensify, further supporting the Euro's rise.
Conclusion
In conclusion, the EURUSD remains on an upward trajectory, buoyed by both technical indicators and fundamental factors. As key economic data is set to be released this week, traders will be vigilant, anticipating potential shifts in the market that could challenge or reinforce the current trend. With the possibility of significant volatility, particularly around the release of US inflation data, the coming days could be pivotal in determining whether the Euro continues to gain ground against the dollar or if a reversal is on the horizon.