The EUR/USD pair dropped to about 1.1730 during early trading in Europe on Wednesday, primarily due to a rise in demand for the US dollar. However, there’s a sense that the downside for these major currency pairs could be limited. There’s an increasing acknowledgment that the European Central Bank (ECB) has finished cutting rates. The ECB is anticipated to maintain the current interest rates in its upcoming meeting on Thursday, having held key deposit rates steady at 2% since July.
In the U.S., mixed employment data for November reflects a labor market that appears resilient, though some signs of slowing are evident. This could lead to a dip in the greenback’s value, perhaps benefiting key currency pairs. The U.S. nonfarm payrolls (NFP) increased by 64,000 in November, following a decline of 105,000 in October, which was better than the predicted increase of 50,000. Meanwhile, the unemployment rate edged up to 4.6% in November from 4.4% the previous month.
Technical analysis:
Currently, the EUR/USD is trading at 1.1732 on the daily chart. The 100-day Exponential Moving Average (EMA) is gradually rising at 1.1611, indicating an upward trend above that level. The 20-period average within the Bollinger Bands has also increased to about 1.1639, supporting a slight rebound. The price appears to be approaching the upper band, which is widening—suggesting strong bullish pressure alongside increasing volatility.
The Relative Strength Index (RSI) stands at 65.58, signifying robust bullish momentum, though it hasn’t reached overbought levels yet. Resistance is immediate just above the Bollinger Bands at 1.1788, while support is noted at the intermediate band around 1.1639 and the 100-EMA at 1.1611. Should the price break through the resistance, it could pave the way for a continued uptrend; on the flip side, failing to breach that level might limit the pair’s upward movement, potentially inviting a retreat to support levels.
