EUR/USD Price Analysis: Descending trend line resistance to cap gains ahead of US CPI


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  • EUR/USD
    gains
    positive
    traction
    for
    the
    second
    successive
    day
    amid
    a
    softer
    USD.

  • The
    technical
    setup
    favors
    bullish
    traders
    and
    supports
    prospects
    for
    further
    gains.

  • Political
    uncertainty
    in
    France
    might
    cap
    gains
    ahead
    of
    the
    crucial
    US
    CPI
    report.


The
EUR/USD
pair

attracts
buyers
for
the
second
successive
day
on
Thursday
and
moves
back
closer
to
a
nearly
four-week
high
touched
on
Monday.
Spot
prices,
however,
remain
below
mid-1.0800s
as
traders
await
the
release
of
the
US
consumer
inflation
figures
before
placing
fresh
directional
bets.

Heading
into
the
key
data
risk,
growing
acceptance
that
the

Federal
Reserve

(Fed)
will
start
cutting
interest
rates
in
September
keeps
the
US
Dollar
(USD)
bulls
on
the
defensive
and
continues
to
lend
some
support
to
the
EUR/USD
pair.
That
said,
the
poll
results
of
the
second
round
of
the
French
parliamentary
elections
raise
the
possibility
of
a
hung
parliament.
This
could
act
as
a
headwind
for
the
shared
currency
and
keep
a
lid
on
any
further
appreciating
move
for
the
major.

From
a
technical
perspective,
the
recent
breakout
through
the
1.0800
confluence
hurdle

comprising
50-day,
100-day
and
200-day
Simple
Moving
Averages
(SMAs)
favor
bullish
traders.
Moreover,
oscillators
on
the
daily
chart
have
been
gaining
positive
traction
and
suggest
that
the
path
of
least
resistance
for
the
EUR/USD
pair
is
to
the
upside.
That
said,
any
subsequent
move-up
is
likely
to
confront
stiff
resistance
near
a
downward-sloping
line,
currently
around
the
1.0880
area.

That
said,
a
sustained
strength
beyond
will
be
seen
as
a
fresh
trigger
for
bullish
traders
and
pave
the
way
for
additional
gains.
Some
follow-through
buying
beyond
the
1.0900
mark
will
reaffirm
the
constructive

outlook

and
lift
the
EUR/USD
pair
to
the
next
relevant
resistance
near
the
1.0960-1.0965
region.
The
momentum
could
extend
beyond
the
March
swing
high,
around
the
1.0880
area,
and
allow
spot
prices
to
reclaim
the
1.1000
psychological
mark
for
the
first
time
since
early
January.

On
the
flip
side,
any
meaningful
dip
is
likely
to
attract
fresh
buyers
near
the
1.0800
confluence
resistance
breakpoint
turned
support.
This
should
help
limit
the
downside
for
the
EUR/USD
pair
near
the
1.0755-1.0750
horizontal
zone.
Failure
to
defend
the
said
support
levels,
however,
might
prompt
some
technical
selling
and
drag
spot
prices
further
below
the
1.0700
mark,
towards
challenging
June
monthly
swing
low,
around
the
1.0665
region.

EUR/USD
daily
chart


fxsoriginal

Euro
FAQs

The
Euro
is
the
currency
for
the
20
European
Union
countries
that
belong
to
the
Eurozone.
It
is
the
second
most
heavily
traded
currency
in
the
world
behind
the
US
Dollar.
In
2022,
it

accounted

for
31%
of
all
foreign
exchange
transactions,
with
an
average
daily
turnover
of
over
$2.2
trillion
a
day.
EUR/USD
is
the
most
heavily
traded
currency
pair
in
the
world,

accounting

for
an
estimated
30%
off
all
transactions,
followed
by
EUR/JPY
(4%),
EUR/GBP
(3%)
and
EUR/AUD
(2%).

The
European
Central
Bank
(ECB)
in
Frankfurt,
Germany,
is
the
reserve
bank
for
the
Eurozone.
The
ECB
sets
interest
rates
and
manages
monetary
policy.
The
ECB’s
primary
mandate
is
to
maintain
price
stability,
which
means
either
controlling
inflation
or
stimulating
growth.
Its
primary
tool
is
the
raising
or
lowering
of
interest
rates.
Relatively
high
interest
rates

or
the
expectation
of
higher
rates

will
usually
benefit
the
Euro
and
vice
versa.
The
ECB
Governing
Council
makes
monetary
policy
decisions
at
meetings
held
eight
times
a
year.
Decisions
are
made
by
heads
of
the
Eurozone
national
banks
and
six
permanent
members,
including
the
President
of
the
ECB,
Christine
Lagarde.

Eurozone
inflation
data,
measured
by
the
Harmonized
Index
of
Consumer
Prices
(HICP),
is
an
important
econometric
for
the
Euro.
If
inflation
rises
more
than
expected,
especially
if
above
the
ECB’s
2%
target,
it
obliges
the
ECB
to
raise
interest
rates
to
bring
it
back
under
control.
Relatively
high
interest
rates
compared
to
its
counterparts
will
usually
benefit
the
Euro,
as
it
makes
the
region
more
attractive
as
a
place
for
global
investors
to
park
their
money.

Data
releases
gauge
the
health
of
the
economy
and
can
impact
on
the
Euro.
Indicators
such
as
GDP,
Manufacturing
and
Services
PMIs,
employment,
and
consumer
sentiment
surveys
can
all
influence
the
direction
of
the
single
currency.
A
strong
economy
is
good
for
the
Euro.
Not
only
does
it
attract
more
foreign
investment
but
it
may
encourage
the
ECB
to
put
up
interest
rates,
which
will
directly
strengthen
the
Euro.
Otherwise,
if
economic
data
is
weak,
the
Euro
is
likely
to
fall.
Economic
data
for
the
four
largest
economies
in
the
euro
area
(Germany,
France,
Italy
and
Spain)
are
especially
significant,
as
they
account
for
75%
of
the
Eurozone’s
economy.

Another
significant
data
release
for
the
Euro
is
the
Trade
Balance.
This
indicator
measures
the
difference
between
what
a
country
earns
from
its
exports
and
what
it
spends
on
imports
over
a
given
period.
If
a
country
produces
highly
sought
after
exports
then
its
currency
will
gain
in
value
purely
from
the
extra
demand
created
from
foreign
buyers
seeking
to
purchase
these
goods.
Therefore,
a
positive
net
Trade
Balance
strengthens
a
currency
and
vice
versa
for
a
negative
balance.