EUR/USD Buyers Target New Highs as Dollar Weakens Ahead of Strong PMI Reports
Wednesday Market Overview:
On Wednesday, the continued correction in the US Dollar Index has led to gains in peer currencies and commodities. This trend is further supported by better-than-expected PMI reports, boosting the euro as buyers step in. The positive sentiment surrounding the euro is driven by the improving economic indicators, providing a strong foundation for the currency’s upward movement.
Technical Analysis:
On the one-hour chart, EUR/USD has garnered support from buyers, maintaining its short-term uptrend above the 100 and 34-period moving averages. Buyers are targeting the previous high at 1.07542. A sustained break above this key resistance could pave the way for higher targets at 1.07592 and 1.07654. Continued bullish momentum beyond these levels would set the stage for a test of the July high around 1.07750.
Alternative Scenario:
If sellers manage to halt the upward movement, immediate support is found at 1.07472, followed by the critical support at 1.07360. A break below this lower support, which lies near the moving averages, could invalidate the bullish scenario.
Market Overview and Key Levels
Resistance Levels:
- Resistance 4: 1.07750
- Resistance 3: 1.07654
- Resistance 2: 1.07592
- Resistance 1: 1.07542
Current Price (at the time of analysis): 1.07526
Support Levels:
- Support 1: 1.07472
- Support 2: 1.07360
Impactful Events:
Investors are closely monitoring upcoming economic reports that could significantly impact the EUR/USD pair:
US Weekly Jobless Claims: Scheduled for release on Wednesday afternoon, this report will provide insights into the US labor market. Lower-than-expected claims could strengthen the dollar, potentially pressuring EUR/USD.
ADP Employment Change: This report, also due on Wednesday, is a precursor to the more comprehensive Non-Farm Payrolls report. Strong employment numbers could bolster the dollar.
ISM PMI Reports: The ISM’s PMI indices are key indicators of economic health. Strong readings could reinforce the dollar’s strength, while weaker figures might support further gains in EUR/USD.
The market is particularly attuned to comments from Federal Reserve Chairman Jerome Powell, who has indicated a cautious approach to rate cuts. Investors are keen to see how this stance aligns with the latest economic data.
Technical Indicators 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 the current positive price action.
Conclusion:
The EUR/USD pair is currently benefiting from a weakening US dollar and strong economic data from the Eurozone. A break above 1.07542 could lead to further gains, targeting 1.07592, 1.07654, and potentially the July high at 1.07750. However, if sellers regain control, the pair could find support at 1.07472 and 1.07360, with a break below this level potentially reversing the bullish outlook.
Traders should closely watch the upcoming US jobless claims, ADP employment report, and ISM PMI indices for clues on market direction. Staying attuned to these economic indicators and key technical levels will be crucial for navigating the current market environment effectively.
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