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EUR/USD Buyers Strive to Maintain Upward Trend

EUR/USD Buyers Strive to Maintain Upward Trend

Date: Tuesday, June 4, 2024 

Tuesday Market Overview: 

The value of the US dollar experienced a significant decline on Monday following the release of PMI data, which indicated a decrease in manufacturing activity for the second consecutive month in May. This downward trend continued into Tuesday, as the Dollar Index fell further in both cash and futures markets, extending overnight losses with the opening of European trading. This environment has provided a supportive backdrop for the EUR/USD pair, contributing to its upward momentum. 

Technical Analysis: 

On the daily chart, the EUR/USD pair has been exhibiting bullish behavior, particularly after breaking above the key resistance level at 1.08887 during Monday’s trading session. The pair is currently trading in the upper half of the Bollinger Bands, suggesting the potential for higher highs. At present, the price is navigating between the broken resistance-turned-support at 1.08887 and the next resistance level at 1.09161. Should buyers manage to surpass this resistance, continued upward momentum could target the subsequent resistance levels at 1.09573 and 1.09894, further solidifying the bullish trend. 

Alternative Scenario: 

If the resistance at 1.09161 holds firm and prevents further ascent, sellers may push the price back down towards the supports at 1.08887 and 1.08502. A more significant bearish move would be indicated by a break below the 1.07880 support level, which would invalidate the current bullish outlook. 

Market Overview and Key Levels 

Resistance Levels: 

  • Resistance 3: 1.09894 
  • Resistance 2: 1.09573 
  • Resistance 1: 1.09161 

Current Price (at the time of analysis): 1.09010 

Support Levels: 

  • Support 1: 1.08887 
  • Support 2: 1.08502 
  • Support 3: 1.07880 

Impactful Events: 

Several key economic reports and events are scheduled for Tuesday, which are likely to influence the EUR/USD pair: 

  • German Labor Market Report: This will provide insights into the employment situation in the Eurozone’s largest economy. Strong labor market data can bolster the euro by indicating economic resilience. 
  • US Weekly Jobless Claims: This data will shed light on the health of the US labor market. Higher-than-expected claims can weaken the dollar by raising concerns about the strength of the economic recovery. 
  • US Factory Orders: This report will offer clues about the state of the US manufacturing sector. Strong orders data can support the dollar, while weak data can apply additional pressure. 
  • Speeches from ECB Officials: Comments from European Central Bank policymakers can impact the euro, especially if they provide hints about future monetary policy directions. 

Oscillators and Risk Warnings: 

  • RSI (Relative Strength Index): Bullish, indicating strong buying momentum. 
  • MACD (Moving Average Convergence Divergence): Bullish, supporting the upward trend. 
  • Moving Averages: Bullish, reflecting positive price action. 

Conclusion: 

The EUR/USD pair is currently benefiting from a favorable technical and fundamental backdrop. The recent decline in the US dollar, driven by weaker manufacturing data and heightened expectations of interest rate cuts, has helped to bolster the euro.  

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