EURUSD bulls are not ready to give up

The euro continues its upward trend against the US dollar following a slight pullback, benefiting from renewed USD weakness. As of this writing, EUR/USD rebounded near the key psychological level of 1.1800. The pair retreated slightly to 1.1760 on Thursday after hitting a fresh monthly high of 1.1822, with the modest pullback likely providing new buyers an opportunity to enter.

Momentum was supported by a stronger-than-expected Eurozone CPI data

After a brief pause and decline, EURUSD regained its momentum, bolstered by inflation data from the Eurozone that exceeded expectations. The latest Consumer Price Index (CPI) figures revealed that Eurozone inflation climbed to 2.6% in March, surpassing the 2.5% estimate and the European Central Bank’s (ECB) target of 2%, primarily due to rising energy costs. Additionally, the monthly CPI increased to 1.3%, underscoring the intensifying price pressures.

This hotter-than-expected inflation likely boosted market expectations for an ECB rate hike at the next meeting, although minutes from the March ECB meeting suggest officials may seek more evidence before acting. The minutes also highlight concerns that the war has fundamentally altered the inflation outlook.

Fundamentally, the euro’s sustainability in the coming days will depend largely on US dollar behavior and geopolitical developments. Broader market risk sentiment will also influence USD dynamics and provide momentum for the euro.

EURUSD Technical Forecast

The EUR/USD pair is showing a modest increase amid the absence of macroeconomic publications. The technical picture on the daily chart continues to support a fresh advance with a firm bullish tone after the latest bounce. Moving ahead, a successful break above 1.1800 again will provide the next sign of strength. If the pair successfully settles above 1.1800, then the next resistance is pegged above 1.1840. If the price breaks above 1.1840, the next upside level to watch is 1.1870/80.

On the flip side, the first nearest support is expected at the 1.1760 area, while further down, demand is also expected around 1.1730/20, which will act as the next area of support. A break and close below 1.1700 would indicate a more significant bearish shift and amplify negative sentiment.

 

Warning! This material is not intended as investment advice. Past performance data does not guarantee future returns. Investing in foreign currencies may affect your returns due to their fluctuations. Any transaction in securities may result in both profits and losses. The assumptions and expectations set forth in this material are only estimates that may not be accurate and may change depending on current economic conditions. These statements do not guarantee future returns.