Market Analysis

EUR/USD reached a new high for the week, touching 1.0880 during Tuesday's European session. This rise is attributed to a weakening US Dollar (USD) and increasing uncertainty regarding the European Central Bank's (ECB) plans to adjust key interest rates after its June meeting.

The US Dollar Index (DXY), which measures the USD against major currencies, continued its decline to 104.40. Despite expectations previously favoring Federal Reserve (Fed) interest rate cuts starting in September, recent data from the CME FedWatch tool shows a 50% likelihood of the Fed maintaining its current policy in September, up from about 35% the previous week.

Strong economic indicators in the United States and a more hawkish stance from policymakers have tempered expectations of rate cuts, influencing market sentiment. Attention this week is focused on Friday's release of the core Personal Consumption Expenditure price index (PCE) for April, a key inflation gauge for the Fed.

Technical Analysis: EUR/USD rose to 1.0880, supported by a breakout from a Symmetrical Triangle pattern on the daily chart. The pair remains bullish, trading above short- and long-term Exponential Moving Averages (EMAs).

The 14-period Relative Strength Index (RSI) suggests neutral momentum, having moved into the 40.00-60.00 range from previously overbought conditions.

Looking ahead, EUR/USD could target higher levels such as 1.0900, followed by resistance at 1.0950 and the psychological barrier of 1.1000 if it surpasses current levels. Conversely, a drop below the 200-day EMA at 1.0800 could indicate a bearish trend continuation.

Paraphrasing text from "FX Street" all rights reserved by the original author.