The EUR/USD pair continued to face downward pressure on Wednesday, dipping to a one-week low during the Asian session. After falling to the 1.1300 level, the pair managed to rebound slightly, currently trading around 1.1380, still down by more than 0.35% for the day.
The US Dollar (USD) extended its rebound from a three-year low seen earlier in the week, contributing to the downward movement of the EUR/USD pair. However, concerns over the US economy’s outlook and expectations for more aggressive policy easing by the Federal Reserve (Fed) helped temper the USD’s strength, limiting the losses for the currency pair. Additionally, a broader risk-on market sentiment helped cap further USD gains.
From a technical perspective, the EUR/USD pair demonstrated resilience despite falling below the 23.6% Fibonacci retracement level of its recent rally, which was sparked by the important 200-day Simple Moving Average (SMA). The bullish signals from the Moving Average Convergence Divergence (MACD) and the daily Relative Strength Index (RSI) easing from the overbought zone suggest that the bullish momentum may still be in play, although caution remains.
A sustained break below the 1.1300 level could signal the pair’s top near the 1.1575 region, the highest point reached earlier this month. In such a case, further declines could target the 1.1250 area, the 38.2% Fibonacci retracement level, followed by the 1.1200 and 1.1160-1.1155 levels, representing the 50% Fibonacci retracement zone.
On the other hand, the 1.1400 level is now seen as an immediate resistance point, with the next hurdle lying around 1.1425-1.1430. A strong rally past this resistance could push EUR/USD above the psychological 1.1500 mark, bringing the multi-year peak of 1.1575 back into focus. Further gains could eventually target the 1.1600 round-figure level.
Related topics:
