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29/08/24
107
EUR/USD Recovery Faces Headwinds Amid Market Caution
The EUR/USD pair has shown signs of recovery, bouncing back from the critical Fibonacci support level at 1.1107 after experiencing a sharp decline. However, the potential for a more significant upside movement could be curtailed by a prevailing sense of risk aversion in the market and the rising demand for the US Dollar as a safe haven.
Investor sentiment is cautious as markets digest disappointing sales forecasts from Nvidia, a leading American technology firm, while simultaneously gearing up for key economic data releases. On Thursday, Germany will unveil its preliminary inflation figures, while in the US, the second estimate of Gross Domestic Product (GDP) is expected to attract significant attention.
From a technical analysis standpoint, the EUR/USD trend remains positive as long as the support at 1.1107 holds. This level corresponds to the 23.6% Fibonacci retracement of the rally that commenced from 1.0775 and peaked at 1.1202 in August. The 14-day Relative Strength Index (RSI) remains strong, currently indicated above the threshold of 50, implying sustained bullish momentum.
In order for the EUR/USD to regain upward traction, it needs to close above the psychological barrier of 1.1150 on a daily basis, allowing for a potential revisit of the yearly peak situated just above 1.1200. The previous day’s high at 1.1186 may serve as a near-term resistance point for those betting against further gains.
Conversely, should the pair decisively fall below the crucial 23.6% Fibonacci support at 1.1107, it could pave the way for additional declines toward the 38.2% Fibonacci level positioned at 1.1045. Immediate support is anticipated at the 21-day Simple Moving Average (SMA) located at 1.1026, with further drops potentially approaching the psychologically significant 1.1000 level.
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