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13/09/24
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EUR/USD Rebounds as U.S. Dollar Weakens Amid Rate Cut Speculation
The EUR/USD currency pair is experiencing a rebound this week after touching a multi-week low, driven largely by a weakening US dollar. The Greenback is under pressure due to speculation surrounding a potential interest rate cut by the Federal Reserve, as well as a broader positive sentiment in the market. Traders looking to take new positions may need to wait for a breakout from a descending price channel.
Following a recovery from the significant psychological support level of 1.1000, which represents a near four-week low, the EUR/USD has attracted additional buying interest for the second consecutive day. Throughout the Asian trading session, the pair rallied toward the 1.1090 level, buoyed by weakness in the dollar.
The latest data showing lower-than-expected inflation, illustrated by the US Producer Price Index, has intensified expectations for a larger interest rate reduction from the Federal Reserve in the upcoming week. This situation, combined with a generally optimistic market outlook, has pushed the US dollar to its lowest point in over a week, creating favorable conditions for the euro. Additionally, the European Central Bank’s lack of specific guidance on interest rates has helped to sustain the euro’s strength against the dollar.
From a technical analysis standpoint, the pair is currently positioned at the upper end of a descending trend channel that has been in place for over three weeks. A sustained move beyond this resistance could indicate the end of the recent downtrend that followed last month’s highs, potentially leading to further appreciation. If the EUR/USD continues to rise, the next significant resistance level may appear around the 1.1155 area, with aspirations to break past the critical 1.1200 level.
Conversely, immediate support levels are being observed near the 1.1065 – 1.1060 range, which offers a buffer before approaching the pivotal support at 1.1000. Should this level prove insufficient and the price breaks below the descending channel support near 1.0975, it could signal a shift towards bearish market conditions, potentially driving the pair below 1.0900, with intermediate support located near 1.0950.
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