After suffering heavy losses last week, as the Dollar strengthened against most Forex currencies, EUR/USD has rebounded sharply since the beginning of the week.
After bottoming out at 1.0868 last Friday, the lowest since July 6th, the Euro Dollar has been heading higher, rising to 1.0928 at the time of writing.
EUR/USD is regaining ground after a 6-week low; here's why
Recall that last week, the EUR/USD had suffered from a sharp rise in the greenback, boosted by US retail sales well above expectations, and especially by hawkish minutes, which revealed several FOMC members remain worried. Inflation, thus calling into question the prospect of a pause in rate hikes.
As for the improvement observed since the beginning of the week, no news in particular is motivating the rebound, apart from a generalized climate of risk appetite. Indeed, yesterday's economic calendar remained very light, and the only notable event, the German PPI, which came in below expectations, was more of a bearish factor.
On the other hand, we can assume, as Scotiabank noted in a note published yesterday, that investors are reducing their positions in dollars in anticipation of the Jackson Hole symposium, which will begin on Thursday and during which Fed chief Jerome Powell could make very influential comments for the Dollar and Forex in general.
As for the following events likely to influence the EUR/USD price, US existing home sales will be monitored on Tuesday, while tomorrow will focus on the preliminary estimates of the European PMI indicesand the sales of new US homes.
Thursday will mark the start of the Jackson Hole symposium and US durable goods orders. Finally, Friday will see the release of Germany's GDP and host speeches from Christine Lagarde, ECB President, and Jerome Powell, Fed Chief.
Beginning of a sustainable bullish trend for the Euro Dollar?
From a graphical point of view, the recent bounce of the EUR/USD finds a clear justification.
Indeed, as seen in the graph above, the recent rise in the currency pair corresponds to a rebound from the lower boundary of a broad, bullish channel stretching since the end of 2022.
Thus, this week's bounce could be the first leg of a more significant uptrend, with a view to a return to the upper band of this channel. However, the 100-day moving average at 1.0930 shows immediate resistance for now.
Crossing this threshold would open the way to the significant psychological point of 1.10. On the downside, 1.09 and 1.0850 are the first potential supports before the 200-day moving average (1.0795), whose breakout would challenge the underlying uptrend of EUR/USD.
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