EURUSD on the Rise: Will Bullish Momentum Hold or Is a Correction Looming? 

The EURUSD exchange rate has been on an upward trend since early July, climbing from a low of 1.06656 to a peak of 1.10080 in early August. The rise is influenced by expectations of a rate cut in September and weakening inflationary pressures, diminishing the appeal of the US Dollar.

Technical indicators reinforce this bullish sentiment, with the price above the 50-period EMA and the Momentum oscillator above its 100 baseline. However, a negative divergence between price and momentum suggests the potential for a correction in the near future.

Wednesday 09:00 am (GMT+0) – Europe: Employment Change q/q (EUR)

Wednesday 09:00 am (GMT+0) – Europe: GDP q/q (EUR)

Wednesday 12:30 pm (GMT+0) – USA: CPI m/m (USD)

Wednesday 14:30 (GMT+0) – EIA Crude Oil Stocks Change (USD)

Wednesday 22:45 (GMT+0) – New Zealand: Electronic Card Retail Sales m/ (NZD)

Wednesday 23:50 (GMT+0) – Japan: GDP q/q (JPY)

Thursday 01:30 am (GMT+0) – Australia: Employment Change (AUD)

Thursday 06:00 am (GMT+0) – UK: Manufacturing Production m/m (GBP)

Thursday 12:30 pm (GMT+0) – USA: Core Retail Sales m/m (USD)

Friday 06:00 am (GMT+0) – UK: Retail Sales m/m (GBP)

Friday 12:30 pm (GMT+0) – USA: Building Permits (USD)

The EURUSD exchange rate has been rising since it hit a low of 1.06656 in early July and reached a peak of 1.10080 on August 5.

The upcoming rate cut in September, coupled with weakening inflationary pressures, make the US Dollar less appealing, at least for now, pulling the EURUSD higher.

Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator support the currency pair’s bullish bias. Specifically, the price is above the EMA, and the Momentum oscillator registers values above the 100 baseline. Furthermore, the Relative Strength Index is between the 50 and 70 lines. On closer inspection, one can identify a negative divergence between the price and the Momentum oscillator warning for a potential correction to the downside.

Should the buyers maintain market control, traders may direct their attention toward the four potential resistance levels below:

1.10080: The first price target is set at 1.10080, aligning with the peak marked on August 5.

1.10612: The second target is estimated at 1.10612, calculated as the (R2) resistance using the weekly Pivot Points method.

1.10865: The third price target is established at 1.10865, corresponding to the 161.8% Fibonacci Extension between the swing high of 1.10080 and the swing low of 1.08810.

1.11144: An additional resistance is seen at 1.11144, corresponding with the (R3) resistance calculated using the weekly Pivot Points method.

Should the sellers seize market control, traders may consider the four potential support levels listed below:

1.09475: The primary downside target is identified at 1.09475, reflecting the peak marked on July 17.

1.08810: The second support level is 1.08810, representing the trough of the latest swing marked on August 8.

1.08072: The third support line is identified at 1.08072, reflecting the (S2) support calculated using the weekly Pivot Points method.

1.07770: An additional downward target is observed at 1.07770, representing the trough formed on August 1.

In conclusion, while the EURUSD’s recent upward trend is supported by favorable economic conditions and technical indicators, caution is warranted due to emerging signs of potential market correction. The upcoming key economic events will likely play a pivotal role in determining the pair’s next direction.