- EUR/USD gained positive traction on Monday amid the emergence of fresh USD sale.
- Last week's breakdown below 100-period SMA in H4 warns of caution in bulls.
- The bears can now wait for the weakness below the region of 1.1265 before applying fresh bets.
The EUR/USD pair attracts some consumers at the start of a new week and climbs back in the mid -1.1300s during the Asian session amid a wide weaker US dollar (USD). The mixed technical setup, however, warned some precautions before positioning for any significant recovery from a three-week low, around the region 1.1265 touched last Thursday.
Last week's fall below the 100-per-period Simple Moving Average (SMA) in the 4-hour chart-of the first time since early April-was seen as a major trigger for bearish businessmen. Oscillators in the sun -day chart held on the bullish territory and began to obtain positive traction in time -ORAs charts. Therefore, some of the following purchases are required to confirm that the recent EUR/USD correction has recently pulled from the 1.1575 area, or the highest level since November 2021 touched last week, has run its course.
Meanwhile, the aforementioned support breakpoint, currently located near the area of 1.1375, can now act as an immediate obstruction early on the 1.1400 round figure. A sustainable strength beyond the latter should allow the EUR/USD pair to surpass the 1.1425-1.1430 intermediate barriers and aim to obtain the 1.1500 psychological mark. The momentum could further expand towards challenging the multi-year peak, around the 1.1575 regions touched in April 2021 on the route to the 1.0600 mark.
On the flip side, the reception below the 1.1300 mark, leading to a subsequent break by the 1.1270-1.1265 region, or the multi-week-touched Thursday, will confirm the negative bias. The EUR/USD pair can accelerate the fall to the 1.1200 round figure on route to the 1.1160-1.1155 area. The next relevant support is peg close to the 200-period SMA in the 4-hour chart, around the 1.1125 zone, which if damaged certainly should provide the way for an additional close removal of the transfer.
EUR/USD 4 hour chart
Euro faqs
Euro is the money for 19 European Union countries belonging to the eurozone. This is the second most seriously exchanged money in the world behind the US dollar. In 2022, it costs 31% of all foreign exchange transactions, with an average sun -shift of more than $ 2.2 trillion a day. EUR/USD is the most heavy -exchanged pair of currency in the world, providing approximately 30%off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the Reserve Bank for Eurozone. The ECB sets interest rates and is in charge of financial policy. The main command of the ECB is to maintain price stability, which means control of inflation or stimulation of growth. Its main tool is to increase or decrease interest rates. The relatively high interest rate – or the hope of a higher rate – usually benefits the euro and vice versa. The ECB Governing Council is making financial policy decisions at meetings held eight times a year. The decisions were made by the leaders of Eurozone National Banks and six permanent members, including ECB president Christine Lagarde.
Eurozone inflation data, which is measured by the coexistence index of consumer prices (HICP), is an essential euphoric for the euro. If inflation rises more than expected, especially if above the target of 2% of the ECB, it forces the ECB to raise interest rates to restore it under control. The relatively high interest rate compared to its counterparts can usually benefit the euro, as it makes the region more attractive as a place for global investors to park their money.
Data has released economic health and may affect the euro. Indicators such as GDP, manufacturing and services PMIS, work, and consumer sentiment surveys can influence the direction of single money. A strong economy is good for the euro. Not only does it attract more foreign investments but it can encourage the ECB to put interest rates, which directly strengthens the euro. Otherwise, if economic data is weak, the euro is likely to fall. Economic data for the four largest economies in the Euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the eurozone economy.
Another significant release of data for the euro is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports at a given period. If a country produces highly sought exports then its money gets value from excessive demand created from foreign buyers who seek to buy these goods. Therefore, a positive balance on the net trade strengthens a money and vice versa for a negative balance.
