EUR/USD consolidates last week's gains to the highest level since August, hovers around 1.0900


  • EUR/USD struggles to capitalize on last week’s strong rally amid a modest USD uptick.
  • Bets that the Fed is done raising interest rates might cap any meaningful USD recovery.
  • Friday’s hawkish comments by ECB policymakers should offer some support to the Euro.

The EUR/USD pair is seen consolidating last week's strong gains to its highest level since August 31 and oscillating in a narrow trading band during the Asian session on Monday. Spot prices currently trade around the 1.0900 round figure and seem poised to prolong the recent breakout momentum through a technically significant 200-day Simple Moving Average (SMA).

The US Dollar (USD) kicks off the new week on a positive note and recovers a part of Friday's decline to over a two-and-half-month low, which, in turn, is seen acting as a headwind for the EUR/USD pair. Any meaningful USD recovery, however, still seems elusive in the wake of growing bets that the Federal Reserve (Fed) is done raising interest rates, bolstered by the US data indicating that inflation was cooling faster than anticipated,

Moreover, the markets have started pricing in the possibility of rate cuts during the first half of 2024, which led to the recent steep decline in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond touched a two-month low level of 4.379% on Friday, which, along with a stable performance around the equity markets, should keep a lid on any meaningful appreciating move for the safe Greenback.

The shared currency, on the other hand, might continue to draw support from hawkish remarks by the European Central Bank (ECB) officials on Friday, pushing back against expectations for early rate cut bets. Bundesbank President Joachim Nagel said on Friday that it would be unwise to start cutting interest rates too soon. Moreover, ECB policymaker Robert Holzmann argued that the second quarter was simply too soon for a rate cut.

The aforementioned fundamental backdrop validates the near-term positive outlook for the EUR/USD pair and seems tilted firmly in favour of bullish traders. Even from a technical perspective, last week's sustained breakout through the 100- and the 200-day SMAs confluence barrier suggests that the path of least resistance for spot prices is to the upside in the absence of any relevant macro data from the Eurozone or the US on Monday.

Technical levels to watch

EUR/USD

Overview
Today last price 1.0899
Today Daily Change -0.0010
Today Daily Change % -0.09
Today daily open 1.0909
 
Trends
Daily SMA20 1.0686
Daily SMA50 1.0633
Daily SMA100 1.0792
Daily SMA200 1.0805
 
Levels
Previous Daily High 1.0909
Previous Daily Low 1.0825
Previous Weekly High 1.0909
Previous Weekly Low 1.0665
Previous Monthly High 1.0695
Previous Monthly Low 1.0448
Daily Fibonacci 38.2% 1.0877
Daily Fibonacci 61.8% 1.0857
Daily Pivot Point S1 1.0853
Daily Pivot Point S2 1.0797
Daily Pivot Point S3 1.0768
Daily Pivot Point R1 1.0937
Daily Pivot Point R2 1.0965
Daily Pivot Point R3 1.1021

 

 

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