Amid escalating geopolitical tensions, the EUR base rate has faced pressure, with concerns about the Middle East conflict holding back the Euro for now. However, despite recent weakness, there’s still hope for EUR/USD bulls following last week’s recovery. The global bond market’s dip has the potential to impact US yields, possibly weighing on the dollar, especially if the Middle East situation doesn’t significantly escalate.
EUR/USD Technical Analysis: Potential Trend Reversal
The EUR/USD chart reveals a hammer-like candle on the weekly timeframe from last week, the first in 12 consecutive weeks. This indicates a potential near-term low. However, Monday’s price action was bearish due to safe-haven flows favouring the dollar amid geopolitical unrest. For a bullish scenario, a move above 1.0600 is essential, with 1.0635 as a key level. Conversely, bears need a convincing break below 1.0500 to regain control. The 100 day moving average for EUR to USD is currently at 1.0842.
US Data and Fed Expectations: What is the Best Time to Trade EUR/USD?
While the Fed’s hawkish stance last month boosted the dollar, market expectations are already adjusted. US macro indicators remain relatively strong compared to global counterparts. Upcoming data, including Thursday’s CPI print, will be closely watched. Weakness in CPI or consumer sentiment could support EUR to USD bulls, while strong numbers may add to bearish momentum.
Geopolitical Impact on Markets
Geopolitical concerns impacted the EUR to USD swap rates, and German yields tumbled. The Euro faced pressure against other G10 currencies. With German Industrial Production down and Eurozone Sentix Investor Confidence slipping, the Euro’s performance is mixed. Key events to watch include the US Consumer Price Index later in the week.
Short-Term Outlook
In the short term, EUR swap rates show signs of stabilization. On the 4-hour chart, it’s above the 20-period SMA and could test resistance at 1.0580. Maintaining levels above 1.0530 keeps the short-term bullish bias intact while dropping below 1.0520 could indicate further weakness ahead.
US Dollar’s Rollercoaster
The US dollar had a volatile session, initially strengthening due to market openings after the Middle East situation but later retreating on a decline in US bond yields. It’s a dynamic situation to watch for the EUR base rate.
