EURUSD is slowly regaining ground on a two week high set on Wednesday, despite a weaker USD.
The EURUSD pair is trading with a little upward bias during the Asian session on Thursday. And is now trading at the 1.0630 level, or a two-and-a-half-week high reached the day before.
The US Dollar (USD) is still on the defensive after the Federal Reserve (Fed) lowered expectations. On further interest rate rises. Aside from that, a positive risk tone helps. given the weakening mood around the safe-haven buck. Which is considered as a tailwind for the EURUSD pair.
Expectations that the Fed is nearing the end of its rate-hiking cycle are weighing on the dollar.
Traders, on the other hand, are hesitant to make strong wagers. Preferring to sit on the sidelines ahead of the latest US consumer inflation statistics. Which may affect views about the Fed’s future rate-hike path and give a fresh directional impulse.
EURUSD Technical Outlook
Technically, the 1.0630-1.0635 range marks the top border of a downward-sloping channel that extends from a 17-month peak reached in June. This is closely followed by the Fibonacci retracement level of the July-October strong slide to the lowest level since December 2022. Which is at 23.6%. A prolonged rise above will indicate that the EURUSD pair has struck a short term bottom and will pave the door for further gains. For a continuation of the recent recovery move from the 1.0450-1.0445 range, or the YTD low, shown during the last two weeks.
Given that oscillators on the daily chart have just recently begun to acquire traction. The EURUSD pair might try to retake the 1.0700 round figure milestone for the first time since September 20. The momentum might be extended further towards challenging the 50 day Simple Moving Average (SMA). Which is now at 1.0740, en route to the next key obstacle near 1.0765, or the 38.2% Fibo. level. The latter should limit the gains amid anticipation that more rate rises by the European Central Bank (ECB) are off the table for the time being.
On the other hand, the 1.0600 round figure is now The 1.0565 horizontal zone appears to operate as an instant support. This is followed by the weekly low. Which was established on Monday in response to an unprecedented attack on Israel by the Hamas militant organization in Gaza over the weekend. A convincing break below the latter might alter the bias back in favor of bearish traders. Dragging the EURUSD pair deeper below the psychological level of 1.0500. Towards a retest of the YTD bottom in the 1.0450-1.0445 range.
