EUR/USD: towards a possible recovery of the euro against the dollar in the short term
EUR/USD resists despite sharp rise in risk aversion in markets
The EUR/USD price has shown stability for several days, despite a sharp increase in risk aversion in the markets. The euro remained in balance against the US dollar for several sessions as most other major currencies decline on growing recession fears, China health restrictions and the Fed's rapid tightening.
This resilience of the euro against the dollar is a hopeful sign of a recent excess of pessimism about the single currency. Thus, the euro can quickly gain momentum, as soon as the slightest clarification of the general mood of market participants appears.
At a slightly more fundamental level, the EUR/USD rally could be justified by even more hawkish rhetoric from ECB members as more officials speak in favor of raising rates towards the end of the year. Several ECB members are expected to speak this week, including a speech by Christine Lagarde on Wednesday.
The EUR/USD pair will also be sensitive to the release of US inflation data on Wednesday. Lower-than-expected figures would ease pressure on the Fed to tighten monetary policy, which would benefit EUR/USD.
4-hour EUR/USD price chart - key levels
The exit of the EUR/USD pair from the range will set the pace
In terms of technical analysis, since the beginning of the month, the EUR/USD pair has fluctuated between a 2015 low at 1.0462 and a 2020 low at 1.0637. The outlook is technically neutral in the short term between these two limits, but the risk/reward ratio is favorable for buying. Indeed, the bottom of 2015 is an extremely important price level, around which the exchange rate recovered in 2017 and 2020.
A bounce above $1.0637 will pave the way for a short-term EUR/USD bullish reversal that could extend to the symbolic $1.10 threshold. Conversely, a pullback below $1.0462 will pave the way for a continuation of the underlying downtrend, with the next support to watch for being the 2017 low at $1.0340.
Entry: buy above $1.0640
Risk-reward ratio: >3
Follow the price of the EUR/USD pair with IG
Disclaimer: IG only provides order fulfillment services. The above information comes from an external service provider and is provided for informational purposes only. They do not constitute our quote history. IG disclaims all responsibility for its use and the consequences arising therefrom. IG cannot guarantee that the information provided above is complete or accurate and therefore is not responsible for the risks incurred by any person acting solely on the basis of this information. Please note that this information does not take into account the financial situation and specific investment objectives of the individuals who receive it. Finally, this information is not intended to satisfy legal requirements regarding the independence of investment research. It is strictly forbidden to reproduce or distribute all or part of this information for commercial or personal purposes.
In addition to the statements below, please note that the information on this page does not constitute a history of our quotes or an offer or offer to invest in any financial instrument. IG Bank S.A. assumes no responsibility for its use and the consequences arising from it. Please note that this information does not take into account the financial situation and specific investment objectives of the individuals who receive it. This information is not intended to comply with legal requirements regarding the independence of investment research. Therefore, they should be considered as communication for marketing purposes. Finally, while our ordering policy is not restrictive, we do not seek to take advantage of these guidelines before communicating them to our customers. See independent research statement.
Start Forex trading today
Trade the world's most traded and volatile market
- Spreads from 0.6 pips on EUR/USD
- Analyze price movements on clear and fast charts
- Trade on the go with our intuitive mobile apps
Do you see an opportunity to make money on Forex?
Practice risk-free on a demo account and make sure you're on the right track.
You can check out the full list of brokers to bypass.
Comments (0)