The EUR/USD currency pair is gaining momentum, recently clearing the August high of 1.1202, suggesting the potential for a breakout beyond last week’s range-bound trading. As the pair tracks above the 50-Day Simple Moving Average (SMA) of 1.1017, it maintains an upward trajectory, potentially signaling further gains.
US Dollar’s Challenge: Can EUR/USD Push Towards New Heights?
With EUR/USD hitting a fresh yearly high at 1.1214, traders are watching closely as the pair forms higher highs and lows. This bullish trend hints at a possible retracement of the previous decline from the 2023 peak of 1.1276. The Federal Reserve’s evolving stance on interest rates could add fuel to this rally, particularly as officials predict the federal funds rate will hold at 4.4% by the end of 2024.
For those looking to stay ahead of market trends, consider joining David Song’s Weekly Fundamental Market Outlook Webinar, where David offers real-time insights and takes questions from participants. Register Here.
Fed Watch: How Policy Shifts Could Impact the Dollar
The upcoming Federal Open Market Committee (FOMC) meeting on November 7 looms large, with the US Dollar facing potential headwinds. Speculation around the Fed’s rate-cutting cycle is intensifying, though recent economic data could lead to internal disagreements among policymakers. Fed Governor Michelle Bowman has indicated her preference for a smaller initial cut, noting that the economy remains robust, despite inflationary concerns.
Governor Bowman emphasized, “We are much closer to neutral than pre-pandemic levels,” while also pointing to the evolving labor market dynamics fueled by immigration. Her comments, delivered at the 2024 Kentucky Bankers Association Annual Convention, suggest that the Fed’s policy is not on a fixed path, leaving room for adjustments as economic conditions evolve.
EUR/USD’s Path Forward: Eyes on the 2023 High
Recent price action suggests that EUR/USD could soon test its 2023 high of 1.1276, continuing its pattern of higher highs and lows. A breakthrough above the 1.1270-1.1280 Fibonacci region could open the door to the next significant target between 1.1430 and 1.1440.
However, if the bullish momentum falters, the currency pair might face downside risks. Failure to hold above the 1.1070-1.1100 support area could drive the exchange rate lower, with a breach of the monthly low of 1.1002 reigniting concerns of a pullback to the 1.0940-1.0960 Fibonacci zone.
For traders, the 50-Day SMA at 1.1017 remains a key indicator to watch, as staying above this level could signal ongoing strength in the pair.
