The EUR/USD exchange rate remains resilient in the mid-1.0800s range, representing a likely upward path. Powered by a weakened US Dollar, the pair now hovers around 1.0845, with essential support from a significant EMA milestone and a consistent mid-50 in RSI. However, the potential impact of geopolitical tensions and economic data from both the Euro Zone and the United States cannot be overlooked. A potential support level lies in the Fibonacci retracement level at 1.0820, while a resistance of 1.0880 needs to be broken for substantial upward movement.
Early European Monday market saw the pair firm under the mid-1.0800s level due to disappointing US ISM Manufacturing PMI and the University of Michigan Consumer Sentiment Index results. These weakened the US dollar, simultaneously elevating the EUR/USD. Escalating political tensions in Eastern Europe and the Middle East have also contributed to the currency pair’s strength as traders shift towards safe-haven currencies. Yet, with looming unforeseen market volatility due to global conflict, traders are advised to tread cautiously.
The European Central Bank (ECB)’s impending monetary policy decisions expected this Thursday, have led to widespread anticipation of no change in the rate. Continual inflation rates and a stable policy direction from the ECB fuel this speculation. Meanwhile, recovery in the Eurozone, spurred by increased consumer confidence, job growth, and vaccine rollouts further solidify these expectations. However, alterations in the asset purchase program or other non-conventional tools may occur to manage potential uncertainties.
From a technical analysis perspective, the EUR/USD pair is showing an ongoing bullish sentiment. Maintaining above a critical 100-period EMA within four hours supports this positive trend. Nevertheless, traders should be mentally prepared for resistance from a previously established high which may lead to a minor correction dip prior to seeking higher targets. Economic announcements from both the US and the Eurozone could ignite unexpected volatility, making risk management a crucial part of any trading strategy.
The pair is predicted to face resistance at the top of the Bollinger Band and a February 29 peak of 1.0855. Conversely, falling below the lower Bollinger Band could signal bearish sentiments, potentially leading to a steep drop towards the 1.0800 – 1.0790 area. Both bulls and bears must closely observe key resistance and support levels to predict future trends.
The pivotal support and resistance levels for the EUR/USD lie near the intersection of the Bollinger Band’s lower and upper margins, respectively, and round numbers within the 1.0800-1.0805 range. Potential downside risks lie at the lows of February 20 and 13, standing at 1.0761 and 1.0700 respectively. This signals a potential risk towards downward movements, demonstrating the financial pair’s volatility.
At present, the pair is circulating around the 1.0850 mark due to a rise in Eurozone’s Sentix Investor Confidence to -10.5 in March. Concurrently, the US Dollar shows signs of weakness as traders cautiously await the expected monetary policy statement from the ECB.
