EUR/USD Analysis: The Pair Gravitates Towards Two-and-Half Week High Amid US Rate Hike Speculations

During Thursday’s Asian trading session, the EUR/USD pair exhibited a slight positive momentum, settling around the 1.0630 vicinity, echoing the heights of the past two and a half weeks attained just a day prior.

The diminished expectations for the Federal Reserve’s subsequent interest rate increases have put the US Dollar on the back foot.Coupled with this, an upbeat market sentiment is diminishing the allure of the greenback, typically seen as a safe haven, thereby providing a boost to the EUR/USD trajectory.

However, traders appear cautious, opting for a wait-and-see approach, especially with the imminent release of US consumer inflation data which might shape the anticipated course for the Federal Reserve’s interest rate decisions.

Technically, the bracket between 1.0630 and 1.0635 delineates the upper boundary of a descending channel stemming from the 17-month zenith reached in June. This is succeeded by a 23.6% Fibonacci retracement of the considerable July-October descent. Breaching this threshold could signal that the EUR/USD pair has cemented a short-term foundation, potentially leading to a prolongation of its rebound from the recent nadir between 1.0450 and 1.0445, observed in the preceding fortnight.

With daily chart indicators hinting at a burgeoning positive momentum, the pair might target the emblematic 1.0700 level, unseen since September 20. This momentum could further surge, testing the 50-day Simple Moving Average, presently circling the 1.0740 region, proceeding towards the subsequent major resistance near 1.0765, the 38.2% Fibonacci level. However, this uptrend might meet resistance due to prevailing doubts over the European Central Bank’s potential rate increments in the foreseeable future.

Conversely, the 1.0600 mark emerges as a proximal support, succeeded by the 1.0565 horizontal area. This gives way to the week’s lowest at approximately 1.0520, a response to the unforeseen attack by the Hamas faction in Gaza on Israel last weekend. A decisive breach beneath this point could tilt the scales towards the bears, propelling the EUR/USD pair below the key 1.0500 juncture, and possibly revisiting the year’s lowest points around the 1.0450-1.0445 span.