EURUSD | Best Trading Approach for the London Session

Jan 18The EUR/USD exchange rate remains around 1.0900, benefiting from demand in Thursday's Asian trading and the decline of the US dollar. The ECB, with a hawkish stance, opposes expectations of a rate cut, providing additional support. The pair may face downward challenges, with the key level of 1.0844 as the initial support, followed by 1.0723 and other previous lows. Conversely, surpassing the weekly high of 1.0998 could lead to a retest of the December 2023 peak at 1.1139. The technical outlook currently indicates potential short-term losses, with indicators such as a negative MACD and RSI rebounding from the oversold zone. On Wednesday, the EUR/USD recorded new multi-week lows before bouncing to 1.0870, influenced by robust US retail sales data, fueling expectations of a Fed rate cut. Monetary policy tensions also arise in the ECB, with Knot highlighting the discrepancy between market expectations and official forecasts, while Lagarde suggests a potential rate cut in the summer. The increase in bond yields, especially German bunds and US treasuries, has contributed to the strengthening of the dollar. Despite the absence of significant news in the euro area, disappointing results in Chinese fundamentals have added to an atmosphere of uncertainty about the global economic recovery.