At the moment, EUR/USD is trading around the 1.0873 level. This price point is crucial for assessing the next movements in the short term. Let's explore the key factors that could influence the pair in the coming days or weeks:
1. Macroeconomic and Political Context
Inflation and ECB Monetary Policy: Inflation in the Eurozone and decisions by the European Central Bank (ECB) will have a significant impact. The ECB has been focused on inflation control and may keep interest rates elevated if price pressures persist. A more aggressive stance from the ECB could strengthen the euro.
Fed Monetary Policy: The Federal Reserve’s actions are equally important. With signs of an economic slowdown in the U.S. but persistent inflation, the Fed might slow further rate hikes. A more dovish approach from the Fed could weaken the dollar, pushing EUR/USD higher.
2. Technical Analysis
Looking at the charts, we can identify some key levels:
Resistance: The primary resistance level is around 1.0930 - 1.0950. If the price breaks above this area, it could signal a bullish trend.
Support: The first support level is at 1.0820. A break below this could see the pair move toward 1.0780 or even lower.
Trend: Currently, EUR/USD is in a sideways movement, with a consolidation phase between 1.0800 and 1.0930. A decisive break outside this range will provide a clearer signal for the future direction.
3. Possible Scenarios
Bullish Scenario: If EUR/USD manages to break above the resistance at 1.0930, we could see further upside towards 1.1000 and potentially higher, with an intermediate target at 1.1050. This is likely if the ECB takes a more hawkish stance or if U.S. economic data weakens, leading the Fed to adopt a more accommodative policy.
Bearish Scenario: If EUR/USD breaks below the 1.0820 support level, the next target could be 1.0780, with further potential decline toward 1.0700. This could occur if the U.S. dollar strengthens due to robust economic data, pushing the pair lower.
4. Geopolitical Factors
Geopolitical developments in Europe or the U.S. could have an immediate and significant impact on the forex market. Trade tensions, energy issues, and the ongoing Ukraine conflict are key factors to monitor.
Conclusion
EUR/USD is at a critical juncture, with the 1.0873 level acting as a neutral zone. In the coming days or weeks, the market could move in either direction, depending on how macroeconomic and geopolitical factors evolve. Traders should closely monitor the ECB and Fed statements, as well as technical signals indicating a possible breakout or continuation of the current range.
Copyright © Fabio Venditti
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