Introduction:
The EUR/USD pair has been on a northward path, bouncing from a confluence support level near the psychological 1.0900 level. This level is where two major trendlines converge, as shown on the daily chart. In late trading, the pair was up 0.42% to 1.0972, supported by relatively benign market sentiment and broad-based U.S. dollar weakness. The daily and weekly RSI are pointing upwards in unison, indicating a bullish trend. This article will discuss the reasons behind the recent move and what traders can expect in the coming days.
Reasons behind the Move:
The recent move in the EUR/USD pair can be attributed to several factors. The U.S. dollar has weakened broadly due to several reasons, including a dovish Federal Reserve, concerns about the U.S. economic recovery, and rising inflation expectations. The Fed has reiterated its stance on keeping interest rates near zero until 2023, which has put pressure on the dollar. Additionally, the U.S. economic recovery has been slower than expected, which has led to concerns about the country’s future growth prospects. Finally, rising inflation expectations have also weighed on the dollar, as investors seek alternative assets that can provide better returns.
On the other hand, the euro has been supported by a rebound in the eurozone economy, which has shown signs of recovery in recent months. Additionally, the European Central Bank has been more optimistic about the region’s growth prospects, which has boosted the euro’s outlook. Finally, the euro has also been supported by the European Union’s €750 billion stimulus package, which is aimed at providing economic relief to the region’s economies.
What Traders can Expect:
Traders can expect the EUR/USD pair to continue its northward path in the coming days, as the U.S. dollar weakness is expected to persist. However, traders should also be aware of potential pullbacks, as the pair is currently trading near key resistance levels. The 1.1000 level has been a major resistance level in the past and could provide strong resistance in the future.
Additionally, traders should also pay attention to any upcoming economic data releases, as they could impact the pair’s direction. The Eurozone’s flash PMI data, which is due later this week, could provide some insight into the region’s economic recovery. Additionally, the U.S. GDP data, which is due next week, could also impact the dollar’s direction.
Conclusion:
The EUR/USD pair has bounced from a confluence support level near the psychological 1.0900 level, supported by broad-based U.S. dollar weakness. The daily and weekly RSI are pointing upwards, indicating a bullish trend. Traders can expect the pair to continue its northward path in the coming days, but should also be aware of potential pullbacks and key resistance levels. Additionally, traders should pay attention to any upcoming economic data releases, as they could impact the pair’s direction.
