The EUR/USD investing finds itself in a challenging situation. It has recently dipped below the support line of its bullish channel. Pressure from the EMA50 and clear downward signals from Stochastic indicators suggest the likelihood of upcoming price declines. UOB’s analysis aligns with this bearish outlook, pinpointing a target of 1.0448. For this scenario to hold, the price must stay below 1.0575, as surpassing this level could lead to a test of the critical resistance at 1.0640.
Steady EUR Base Rate in a Turbulent Week
Meanwhile, the EUR to USD maintains its equilibrium within the 1.05-1.07 range as investors exercise caution in anticipation of a momentous week filled with major economic news. Geopolitical developments act as a counterbalance, influencing the euro’s attempts to gain upward momentum. This week’s agenda is marked by turbulence, featuring inflation indicators, the eurozone’s growth path, and the US Federal Reserve’s upcoming meeting.
EUR to USD: US Dollar Dominance
The prevailing market sentiment leans toward the US dollar, driven by the varying economic trajectories between the US and the eurozone. Additionally, geopolitical concerns currently favour the US dollar, which traditionally serves as a safe-haven currency. Nevertheless, the Euro to Dollar has shown resilience, maintaining its position within the 1.05-1.07 range for the fourth consecutive week. The currency has effectively absorbed these levels, and its next significant move hinges on upcoming announcements and geopolitical developments.
EUR Base Rate: Potential for Local Lows
The probability of the euro reaching new local lows is elevated, especially if this week’s economic reports and the Fed’s meeting hint at a potential interest rate hike in the US. Although an immediate rate increase is unlikely, the rhetoric from the Fed Chairman may introduce elements of uncertainty. If the European economy displays signs of improvement and tempers the Fed’s aggressive stance, the euro may regain strength, potentially challenging the 1.07 level.
Strategy Amid Uncertainty
The uncertainties surrounding upcoming announcements and geopolitical developments are still occurring. Therefore, now might not be the best time to trade EUR/USD. So, it is advisable to await significant price declines before considering a position in favour of the EUR/USD investing. Market reactions remain unpredictable in light of these ongoing dynamics.
