EURUSD
Fundamental Perspective
EUR/USD continued its upward trajectory, achieving a fourth week of gains and reaching a new 2024 peak in the 1.1180–1.1185 range. This surge was driven by a sharp decline in the US Dollar as market sentiment shifted towards an anticipated Federal Reserve interest rate cut in September. In his Jackson Hole Symposium speech, Fed Chair Jerome Powell reinforced this expectation by expressing confidence that US inflation is moving steadily toward the Fed's target, suggesting a likely quarter-point rate reduction.
Meanwhile, the European Central Bank is also expected to lower rates, with markets anticipating cuts in September and December, potentially bringing the deposit facility rate to 3.25% by year-end. This expectation arises from worsening economic conditions in the eurozone, particularly in Germany, even as inflation remains stubbornly high, especially in the services sector. A slowdown in wage growth across the Eurozone, notably in Germany, adds weight to the case for ECB easing.
As the policy divergence between the Fed and ECB narrows, the focus shifts to the underlying economic conditions, where the US appears firmer. This dynamic may limit the US Dollar's downside in the long term, even as the Euro continues to show short-term strength.
Technical Perspective
A bullish candle was seen on the weekly timeframe, suggesting an upward continuation. Therefore if the pair can hold the momentum, we may see more green days ahead.
On the daily chart, the price aimed higher above the 1.1100 level with a bullish impulsive momentum. It is a sign of a stable trend, supported by the RSI above the 70.00 area. Following the buying pressure, the price may head toward the primary resistance of 1.1275.
On the other hand, a considerable downside pressure is pending as a mean reversion. If the RSI signal line edges toward the midline, it may lead the price toward the primary support near 1.1080, followed by the next support near 1.0900 before bouncing back.
