EURUSD Rally Stalls Into Key Level
Can EURUSD Break Higher?
EURUSD is on watch this week following a fresh push higher last week which saw price trading back up to retest the broken bull trend line and the 1.1756-level resistance. Hawkish ECB expectations are keeping EUR underpinned here with the bank expected to hike rates again this month in line with higher inflation. Elevated energy prices in the wake of the Iran war have sparked fresh inflation risks for the eurozone with the ECB signalling a stronger tightening bias accordingly. Indeed, the ECB has so far been more hawkish than the Fed, leading to the higher exchange rate we’ve seen over the last week.
Iran War & Fed Expectations
Near-term, the key driver for the pair remains the Iran war. USD has typically followed oil prices since the war began with any escalation in the conflict sending both higher. However, this week we’ve seen a slight disconnect with USD remaining weaker despite a fresh push higher in oil. If US/Iran negotiations can get back on track, this should keep USD skewed lower, allowing EURUSD room to push higher. On the other hand, if failed talks lead to a return of attacks between the US and Iran this should drive a fresh leg higher in USD/oil, putting pressured on EURUSD again as the Dollar steals the show and hawkish Fed expectations rise.
Technical Views
EURUSD
The rally in EURUSD has stalled for now into a test of the 1.1756 level and underside of the broken bull trend line. While this area acts as a cap, range bound action between that level and support at 1.1490 is likely. If we do break higher, however, focus will turn to 1.20 as the next bull target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.