EUR/USD has certainly been taking strides this week, with the pair now up for four consecutive days. First it was looking to sustain the break above 1.1000. Then it was looking to challenge the December highs of 1.1123-39. Now the pair may push further towards a 2023 high of 1.1275.
EUR/USD weekly chart
So far this year, the pair has been trading in a range between the 100-week (red line) and 200-week (blue line) moving averages. However, this week, buyers are looking to break out of it. The previous attempt in 2023 was thwarted by the 100-month moving average, but 1.1220 will again be the focus.
Along with the 2023 high of 1.1275, these will be key levels to watch for EUR/USD in the coming weeks as buyers look to ride the momentum of the latest upswing.
The dollar’s gains this week come amid a broader weakening of the greenback, as traders see inflation well under control in the U.S. and the Fed becoming more dovish, pivoting away from the greenback. Meanwhile, a weakening labor market will give rise to concerns that the Fed may be forced to cut interest rates at a faster pace.
In that sense, they expect to see some divergence in the outlook for major central banks, even if other central banks are also cutting rates, but they may not feel the same urgency as the Fed right now, at least in terms of the size of the cuts.
So EUR/USD is not the only chart showing the potential for a stronger breakout: GBP/USD and USD/CHF are also showing clear potential, while USD/CAD, AUD/USD and NZD/USD are also approaching important technical junctures that could mean further pain for the dollar.
