The EUR/USD currency pair has been on a rollercoaster ride lately, with the pair initially hitting a low of below 1.08 in early March 2023. However, the pair has since rebounded and is currently trading at around 1.0890 as of April 3, 2023.
Despite the recent rebound, economists at Scotiabank suggest that a break past 1.0930 is needed to extend the rise. This is because the 1.0930 level has served as a significant resistance level for the pair in the past, and a break past this level would indicate a shift in the market sentiment towards the EUR/USD pair.
Factors Affecting EUR/USD Movement
There are several factors that could affect the movement of the EUR/USD currency pair in the near future. One of the most significant factors is the ongoing COVID-19 pandemic and its impact on the global economy.
The EUR/USD pair is often seen as a barometer of global risk sentiment, with investors flocking to the US dollar in times of uncertainty and volatility. Therefore, any signs of a resurgence in the pandemic or a slowdown in the global economic recovery could lead to increased demand for the US dollar, which could put downward pressure on the EUR/USD pair.
Another factor that could affect the movement of the EUR/USD pair is the monetary policy stance of the European Central Bank (ECB) and the US Federal Reserve. The ECB has maintained an accommodative monetary policy stance in recent years, with interest rates at historic lows and an ongoing asset purchase program.
In contrast, the US Federal Reserve has signaled a more hawkish stance in recent months, with expectations of interest rate hikes and a reduction in its asset purchase program. This divergence in monetary policy stances could lead to a strengthening of the US dollar and a weakening of the euro, which could put downward pressure on the EUR/USD pair.
Technical Analysis of EUR/USD
In addition to fundamental factors, technical analysis can also provide insights into the movement of the EUR/USD currency pair. According to technical analysts, the recent rebound in the pair could be a sign of a bullish reversal, with the pair forming a “double bottom” pattern.
A double bottom pattern is a technical analysis pattern that occurs when the price of an asset forms two consecutive lows that are roughly equal, with a moderate peak in between. This pattern is often seen as a bullish signal, indicating that the price of the asset is likely to rise in the near future.
However, technical analysts caution that a break past the 1.0930 level is needed to confirm the bullish reversal and signal further upside potential for the EUR/USD pair.
In conclusion, the EUR/USD currency pair has rebounded from below 1.08 and is currently trading at around 1.0890. However, economists at Scotiabank suggest that a break past 1.0930 is needed to extend the rise and confirm a bullish reversal.
The movement of the EUR/USD pair is likely to be influenced by several factors, including the ongoing COVID-19 pandemic, monetary policy stances of central banks, and technical analysis patterns