EUR-USD The 1.12 in sight?
The EUR/USD pair has rallied tremendously since the end of September 2022. Indeed, the dollar is weakening for various reasons. Starting with the United States, which is in an economic slowdown. Second, the Fed would likely come to the end of its rate hike cycle against the ECB. And lately, in relation to the monetary policy of the two main central banks, inflation remains on a disinflationary trend due to the drop in commodity prices. This partly explains the excellent health of equity indices, and more particularly in Europe.
Now, the most traded pair of forex traders has done much more than return to parity. It has just successively crossed resistances while validating at the same time, the exit of a bearish channel from above and the passage above the descending line. As a result, the trend is now bullish, at least since April 2021. Because if we zoom out the chart to a larger time frame, the dashboard remains bearish. For the bulls to definitely regain control, it would be necessary to go back above 1.23.
As we speak, breaking above 1.12 would be a first step in neutralizing the long downtrend. In the event that the FED meeting does not tell us anything, the EUR/USD pair could continue its rebound towards this buying target. However, if the 1.12 is touched, we would pay attention to the technical indicators which would show signs of settling in weekly units.
Moreover, each time the RSI touches or sneaks into the overbought zone, a consolidation has always taken place. In this sense, a failure below 1.10 would lead to the formation of a reversal chart pattern under the name of double top at 1.05. Under this support, all of the risky asset classes could potentially enter a risk off environment.
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