EURUSD fades part of Thursday’s strong sell-off and manages to regain the area above the key parity level at the end of the week.

Further consolidation looks the most likely scenario in EUR/USD in the near term at least, always within the 1.0100-0.9900 range and ahead of the key ECB and FOMC events later in the month.

The breakout of the weekly high at 1.0090 (August 26) could spark further gains to 1.0202 (August17 high). Alternatively, the 0.9900 neighbourhood is expected to hold the bearish impulse for the time being.

Following Thursday’s deep pullback, EUR/USD now trades with decent gains and re-targets the key parity level in a context where investors seem to be cashing up part of the recent advance in the greenback to new cycle peaks near the 110.00 hurdle when gauged by the US Dollar Index (DXY).

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0794.

Also outlining important technical levels to trade the EUR/USD pair: “On the upside, 1.0000 (psychological level, 20-period SMA) aligns as immediate resistance ahead of 1.0020 (Fibonacci 23.6% retracement of the latest downtrend) and 1.0060 (100-period SMA). Supports are located at 0.9980 (50-period SMA), 0.9920 (end-point of the downtrend) and 0.9900 (psychological level).

In the meantime, speculation around a 75 bps rate hike by the ECB at the September meeting remains on the rise and it has been exacerbated after signs that inflation in the region is not giving up, as per the latest flash CPI figures for the month of August.

ECB Expected To Provide Some Hawkish Recovery on EURUSD

Sep 03 2022