EURUSD reversed course and surged toward 1.1000.
On Tuesday, the EURUSD fell for the second day in a row before recovering early Wednesday. The pair’s short-term technical picture indicates that sellers are struggling to maintain control. In the absence of high-tier data releases, risk perception may affect. EURUSD movements ahead of the US July inflation report on Thursday.
The Euro was the most powerful versus the US Dollar. The heat map depicts the percentage fluctuations in major currencies against one another.
The USD loses interest midweek as risk sentiment improves.
On Tuesday, the US Dollar (USD) profited from risk aversion and outperformed its peers. However, dovish comments from Philadelphia Federal Reserve Bank President Patrick Harker restrained USD gains and helped EURUSD to recover in the American session.
According to Harker, the Fed may be at a situation where it can be patient and keep rates stable. Rate cuts are likely to begin early next year.
The positive shift in market sentiment seen early Wednesday makes it difficult for the USD to find demand. The Euro Stoxx 50 Index is up more than 1% after a strong start, and US stock index futures are in positive territory.
If risk flows continue to dominate financial markets in the afternoon, the EURUSD could extend its rebound. Market participants may, however, hold off on taking significant positions until the US Consumer Price Index is released on Thursday.
Technical Analysis
The four-hour chart’s Relative Strength Index (RSI) indicator moved slightly above 50, and EURUSD soared above the upper limit of the descending regression channel, indicating a lack of seller interest.
On the upside, the pair will encounter interim resistance around 1.1000 (Fibonacci 61.8% retracement of the most recent upswing, psychological milestone), followed by 1.1020 (200-period Simple Moving Average, Fibonacci 50% retracement) and 1.1050 (100-period SMA, Fibonacci 50% retracement).
If EURUSD falls below 1.0940 (upper limit of the descending regression channel) and begins to use that level as resistance, 1.0900 (channel midpoint) and 1.0860 (channel lower limit) might be considered as the next bearish targets.
