- EUR/USD’s upward trajectory falters, trading near 1.1295 in Thursday’s early European session, reflecting a 0.35% decline on the day.
- Despite the day’s losses, a positive outlook for the pair remains intact above the critical 100-day EMA, further supported by a bullish Relative Strength Index (RSI).
- Immediate resistance is observed at 1.1425, while the initial support level to monitor is positioned at 1.1270.
The EUR/USD pair is exhibiting weakness, currently trading around 1.1295 during the early hours of the European trading day on Thursday. This downward pressure is largely attributed to a resurgence in demand for the US Dollar (USD). Market sentiment suggests that tentative signs of easing tensions in the US-China trade relationship are lending support to the Greenback, thereby creating a countervailing force for the EUR/USD. Market participants are now keenly awaiting the release of the US ISM Manufacturing Purchasing Managers Index (PMI) data later in the day, which is anticipated to provide further insights into the health of the US economy. Analysts predict the PMI will offer clues about future Federal Reserve policy decisions.
From a technical standpoint, the constructive outlook for EUR/USD remains largely unchanged, with the pair maintaining a solid footing above the key 100-day Exponential Moving Average (EMA) on the daily chart. This EMA is a closely watched indicator by technical analysts, often acting as a dynamic support level. The bullish sentiment is further corroborated by the Relative Strength Index (RSI), which is currently positioned above the midline at approximately 55.85. This reading indicates a prevailing bullish momentum in the near term, suggesting that buying pressure remains dominant. However, traders should also be aware of potential overbought conditions as the RSI approaches 70.
To the upside, the initial barrier to further gains is identified at 1.1425, representing the high recorded on April 28th. A decisive break above this level could potentially trigger a surge in momentum, paving the way for a test of 1.1547, the high observed on April 22nd. Beyond this, a more significant resistance level is located at 1.1621, coinciding with the upper boundary of the Bollinger Band. This level is expected to present a substantial challenge to further upward movement. Conversely, failure to overcome the 1.1425 resistance could lead to renewed selling pressure, potentially driving the pair back towards the 1.1270 support level. A break below this support could open the door for further declines towards the 1.1200 level.
