EUR/USD Analysis Summary Today
- Overall Trend: Bullish.
- Support Levels: 1.1810 – 1.1770 – 1.1690
- Resistance Levels: 1.1890 – 1.1970 – 1.2050
EUR/USD Trading Signals:
- Sell EUR/USD from the resistance level of 1.1960, with a target of 1.1700 and a stop-loss at 1.2070.
- Buy EUR/USD from the support level of 1.1700, with a target of 1.1880 and a stop-loss at 1.1630.
Technical Analysis of EUR/USD Today:
The persistent weakness of the U.S. dollar, ahead of the U.S. interest rate cut announcement later today, has helped the EUR/USD bulls quickly push the pair to the 1.1878 resistance level—its highest point in four years—with a daily gain of nearly 1%. The euro's gains were also fueled by investor optimism that exceeded expectations in both the Eurozone and Germany, alongside a generally weak U.S. dollar as the Federal Reserve prepares to resume its rate cuts later today, Wednesday, at 9:00 PM, Egypt time.
Overall, financial markets widely expect the Fed to cut interest rates by at least 25 basis points, as policymakers assess a slowing labor market in the face of persistent inflationary pressures caused by tariffs.
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In contrast, European officials continue to emphasize caution on inflation. In this context, Isabel Schnabel, a member of the ECB's Executive Board, has urged policymakers to "hold their ground," warning that risks ranging from tariffs and services inflation to food prices and fiscal policy remain significant. Peter Kazimir, Governor of the Slovakian Central Bank, echoed this view, warning that ignoring these risks "would be a mistake." Last week, the ECB kept borrowing costs unchanged for the second consecutive meeting, suggesting that its rate-cutting cycle may have ended.
Will the EUR/USD rise to 1.20 today?
Amid a solid bullish trend in recent trading sessions, forex experts have expressed a bullish outlook for the EUR/USD's future. Forex analysts at Scotiabank are targeting multi-year highs, while ING Bank expects the EUR/USD exchange rate to reach the psychological peak of 1.20 within three months.
According to reliable trading platforms, the EUR/USD exchange rate made new gains at the start of this week's trading as the U.S. dollar remained on the defensive, while the French credit rating downgrade had little effect on the euro's price. Technically, a break of the early July high at 1.1830 would lead to a new 4-year high. Its recent gains have pushed the 14-day Relative Strength Index (RSI) toward a reading of 64, which confirms the bullish outlook. At the same time, the MACD lines are moving steadily upward, and the technical indicators have room for stronger gains before reaching overbought territory.
Trading Tips:
Traders are advised to be patient and wait for the currency markets' reaction to the U.S. Federal Reserve's announcement today, which may determine the direction of the U.S. dollar against other major currencies, especially the euro.
EUR/USD Bullish Scenario: The renewed uptrend prompts us to anticipate a break of Tuesday's high of 1.17, targeting 1.18, followed by a potential rally to multi-year highs. Then, a rally to the psychological resistance of 1.20 over a period of three months or more. The Federal Reserve will announce its policy decision on Wednesday. There is a strong expectation that the US central bank will cut interest rates, with markets expecting a 25 basis point cut by approximately 95%, with a small probability of a larger 50 basis point cut. Also, the Fed will release its latest set of economic forecasts, with a primary focus on the committee's interest rate forecasts. To influence currency markets, Powell will need to provide explicit hints about future US interest rate cuts. If the Federal Open Market Committee (FOMC) makes a significant 50 basis point rate cut, it could also lead to a significant decline in the value of the US dollar, unless he indicates limited scope for further cuts.
However, there remains uncertainty over whether Trump's nominee for Fed chair, Merrill Lynch, will be confirmed by the Senate in time for the meeting, which begins Tuesday.
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