Supported by expectations the Fed is going to reduce the pace of policy tightening, the EUR/USD has risen above the 1.04 handle, after recently it recaptured 1.0340, which was the 2017 low.
For now, the path of least resistance remains to the upside, as traders decide whether to push rates decisively above the 200-day average.
Among the upside targets, last week’s high comes in at 1.0481; then there is the 1.0500 handle slightly higher, and finally the 1.06310-1.0638 range, an area which marks the convergence of the 38.2% Fibonacci retracement level with the March 2020 low.
On the downside, key short-term support is seen around 1.0300-1.0310 area, below which there’s not much until the 1.02 handle.
The case for a long-term low was made when rates refused to stay below the 1.000 level after several weeks of sideways action.
We will re-establish our long-term bearish view if and when the bears manage to push rates below parity decisively and specifically below 0.9935. Any short-term weakness in the interim should be treated with caution given the recent breakout.
From a macro point of view, some improvement in Eurozone data has helped to provide the euro relief, but most of the strength is due to the dollar falling. Those less hawkish Fed minutes and weaker-than-forecast US business activity data further fueled speculation the Fed is going to slow down its rate increases and potentially pause in early 2023.
By Fawad Razaqzada on behalf of FOREX.com
For now, the path of least resistance remains to the upside, as traders decide whether to push rates decisively above the 200-day average.
Among the upside targets, last week’s high comes in at 1.0481; then there is the 1.0500 handle slightly higher, and finally the 1.06310-1.0638 range, an area which marks the convergence of the 38.2% Fibonacci retracement level with the March 2020 low.
On the downside, key short-term support is seen around 1.0300-1.0310 area, below which there’s not much until the 1.02 handle.
The case for a long-term low was made when rates refused to stay below the 1.000 level after several weeks of sideways action.
We will re-establish our long-term bearish view if and when the bears manage to push rates below parity decisively and specifically below 0.9935. Any short-term weakness in the interim should be treated with caution given the recent breakout.
From a macro point of view, some improvement in Eurozone data has helped to provide the euro relief, but most of the strength is due to the dollar falling. Those less hawkish Fed minutes and weaker-than-forecast US business activity data further fueled speculation the Fed is going to slow down its rate increases and potentially pause in early 2023.
By Fawad Razaqzada on behalf of FOREX.com