The EUR/USD pair saw a rise from a short-term low of 1.0760 last week, reaching 1.0904 before retreating. This week, the initial bias has turned neutral. There may be more consolidation above 1.0760, and another increase is possible. However, any upward movement is likely to be limited by the 55-day Exponential Moving Average (EMA) at 1.0941. If there is a sustained break below the 61.8% retracement level of 1.0447 to 1.1213 at 1.0740, we could see a further decline towards the 1.0601 support level.
Looking at the bigger picture, the price movements from the 2023 high of 1.1274 are viewed as a consolidation phase within an uptrend from the 2022 low of 0.9534. The recent drop from 1.1213 is considered the third leg of this consolidation. Any downside is expected to be contained by the 50% retracement level of the move from 0.9534 to 1.1274 at 1.0404, which could lead to a resumption of the uptrend in the future.
In the long term, it is believed that a significant low was established at 0.9534 in 2022. However, the EUR/USD pair is currently facing challenges in maintaining levels above the 55-month EMA at 1.1011. As a result, the outlook is uncertain and neutral at this time.
It is essential for traders and investors to closely monitor the key levels mentioned above and watch for any significant breakouts or breakdowns that could indicate the future direction of the EUR/USD pair. Market sentiment and external factors such as economic data releases and geopolitical events can also play a crucial role in shaping the currency pair’s movements in the coming weeks. By staying informed and conducting thorough analysis, market participants can make more informed trading decisions and navigate the ever-changing forex market with greater confidence.
