-
EUR/USD continues to draw support from the divergent ECB-Fed policy outlook.
-
The technical setup favours bullish traders and supports prospects for further gains.
-
Some follow-through buying beyond the 1.1015 area will reaffirm the positive bias.
The EUR/USD pair traded with a positive bias for the fifth day in a row on Friday and is currently just below the 1.1000 psychological mark or touching the previous day’s two-week high.
The shared currency drew support from the fact that the European Central Bank (ECB) on Thursday reaffirmed the need to keep interest rates on hold for longer. In contrast, the Federal Reserve (Fed) signaled a rate cut next year and dragged the US dollar (USD) to a four-month low during the Asian session, which, in turn, acted as a tailwind. EUR/USD pair.
From a technical perspective, the spot price has shown some resilience below the 100-day Simple Moving Average (SMA) earlier this week. A further rally of 250 pips from the 1.0740 region, or about a month low, favors bullish traders. Furthermore, the oscillators on the daily chart are holding comfortably in positive territory and verifying the near-term constructive outlook for the EUR/USD pair.
That said, it would be wise to wait for some follow-through buying beyond the 1.1015 area, or to touch the multi-month peak in November. The EUR/USD pair could then accelerate towards the 1.1065 region (August monthly top) with an aim to recover the 1.1100 mark and test the next relevant resistance near the 1.1100 mid-decade (July 27 high).
On the flip side, the 1.0945 area now seems to protect the immediate downside, below which the EUR/USD pair could test sub-1.0900 levels. Some follow-through selling will negate the positive outlook and drag the spot price to the 200-day SMA support, currently around the 1.0830-1.0825 area. A further break below the 1.0800 mark could reveal the 100-day SMA around the 1.0755 zone.
EUR/USD daily chart
Technical levels to watch
EUR/USD
