Fed Rate Cut Fuels EURUSD Bullish Momentum

The EURUSD pair has been on an uptrend since rebounding from the 1.06651 lows on June 26, strengthened by a “Golden Cross” between the 20 and 50-period EMAs on July 11. The Federal Reserve’s recent 50-basis-point rate cut has added momentum to the bullish trend. Technical indicators like the Exponential Moving Average, Momentum oscillator above 100, and RSI above 50 support the continuation of the upward movement. Key resistance levels are at 1.12000, 1.12462, 1.13956, and 1.16374.

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The EURUSD currency pair has been on an uptrend since June 26 after bouncing off the 1.06651 lows. The pair has been in a persistent uptrend, characterized by a series of higher peaks and higher troughs, further supported by a “Golden Cross” double crossover, marked on July 11, between the 20 and 50-period Exponential Moving Averages (EMAs). The double crossover has intensified the bullish momentum, bolstering the pair’s upward trend. Although there was a brief dip in early September, the exchange rate formed a non-failure swing to resume its upward trajectory fueled by the Federal Reserve’s 50-basis-point rate cut, which injected additional momentum into the market.

Technical indicators, including the 20 and 50-period EMAs, the Momentum oscillator, and the Relative Strength Index (RSI), all suggest a continuation of the bullish trend. The short-term EMA is trading above the longer-term EMA, and price action remains above both, signaling strength in the market. Additionally, the Momentum oscillator is positioned above the 100 baseline, and the RSI is holding above the 50 level, further confirming the upward bias.

Using the Fibonacci Retracement tool, based on the recent swing high of 1.11539 and the swing low of 1.10007, three potential price targets have been identified: 1.12462, 1.13956, and 1.16374. These levels provide potential upside objectives if the current trend persists.

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

1.12000: The initial resistance is 1.12000, which aligns with the highest exchange rate reached in 2024.
1.12462: The second price target is identified at 1.12462, corresponding to the 161.8% Fibonacci Extension between the swing high of 1.11539 and the swing low of 1.10007.
1.13956: The third target is established at 1.13956, aligning with the 261.8% Fibonacci Extension between the swing high of 1.11539 and the swing low of 1.10007.
1.16374: An additional price target is estimated at 1.16374, corresponding to the 423.6% Fibonacci Extension drawn from the swing high of swing high of 1.11539 and the swing low of 1.10007.

Should the sellers take market control, traders may consider the four potential support levels listed below:
1.10572: The first support level is identified at 1.10572, representing the weekly Pivot Point (PP) estimated using the standard method.
1.10007: The second support level is positioned at 1.10007, aligning with a trough marked on September 11.
1.09470: The third line of support is established at 1.09470, representing a peak formed on July 17.
1.07764: An additional downward target is observed at 1.07764, reflecting a daily low from August 1.

The Federal Reserve’s 50-basis-point rate cut has had a significant impact on the EURUSD exchange rate. By lowering interest rates, the Fed effectively reduced the attractiveness of the US dollar for investors seeking higher returns. As a result, the dollar weakened against the euro, leading to an appreciation of the EURUSD pair. This shift reflects a market reaction where lower US rates decrease the relative yield on dollar-denominated assets, making the euro more appealing in comparison. Consequently, the EURUSD exchange rate has risen, reflecting the increased demand for the euro and a reduced demand for the dollar in the wake of the Fed’s decision.

The EURUSD pair continues its upward trajectory, supported by a recent non-failure swing and a 50-basis-point rate cut by the Federal Reserve. Key technical indicators and resistance levels suggest the bullish trend may persist, with potential targets at 1.12462, 1.13956, and 1.16374. Should the trend reverse, support levels at 1.10572, 1.10007, 1.09470, and 1.07764 will be crucial. The recent Fed’s rate cut has weakened the US dollar, further boosting the EURUSD pair.