- EUR/USD is building on this week’s bounce from a multi-week low amid a bearish USD.
- Expectations of a larger rate cut by the Fed and a positive risk tone weigh on the Dollar.
- Bulls need to wait for a breakout through a descending channel before opening new positions.
The EUR/USD pair is building on the previous day’s nice recovery move from the psychological 1.1000 mark, or a near four-week low, and attracting some buyers for the second consecutive day on Friday. The momentum is taking spot prices to the upper end of the weekly range, around the 1.1090 area during the Asian session and is sponsored by the broad-based weakness of the US Dollar (USD).
The softer-than-expected US Producer Price Index (PPI) report released on Thursday raised expectations for a larger rate cut by the Federal Reserve (Fed) next week. This, coupled with a positive risk tone, drags the USD to a more than one-week low and turns out to be a key factor acting as a tailwind for the EUR/USD pair. Meanwhile, the European Central Bank (ECB) refrained from providing specific guidance on interest rates, supporting the shared currency and contributing to the bid tone around the currency pair.
From a technical perspective, spot prices are currently trading near the upper end of a more than three-week-old downtrend channel. A sustained strength beyond it will suggest that the recent corrective decline from the highest level since July 2023 touched last month has come to an end and will pave the way for a fresh appreciating move in the near term. The EUR/USD pair could then accelerate the positive move towards the next relevant hurdle near the 1.1155 zone before making a fresh attempt to conquer the 1.1200 round mark.
On the other hand, the horizontal zone of 1.1065-1.1060 now seems to protect the immediate downside before the pivotal support of 1.1000. The latter is closely followed by the downtrend channel support, currently near the 1.0975 zone, which if broken decisively will be considered a fresh trigger for the bears and will prompt aggressive technical selling. The ensuing decline has the potential to drag the EUR/USD pair towards sub-1.0900 levels, with some intermediate support near the 1.0950 region.
EUR/USD 4-hour chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
