The EUR/USD pair is experiencing a bounce from a multi-week low as the USD remains bearish. With bets for a larger rate cut by the Fed and a positive risk tone, the Greenback is under pressure, allowing the Euro to strengthen. Traders are eagerly waiting for a break through a descending channel to confirm the bullish momentum and place fresh bets on the currency pair.
The recent recovery move has lifted the EUR/USD pair to around the 1.1090 area, near the top end of the weekly range. The weaker-than-expected US Producer Price Index has increased expectations for a bigger rate cut by the Fed next week, leading to USD weakness. Additionally, a positive risk tone in the market has further weighed on the Greenback, providing a tailwind for the Euro. The European Central Bank’s decision to refrain from specific interest rate guidance has also supported the Euro, contributing to the bid tone surrounding the currency pair.
Technically, spot prices are trading near the top end of a descending trend channel. A sustained strength beyond this channel will indicate that the recent corrective decline has come to an end, potentially paving the way for further appreciation in the EUR/USD pair. The currency pair could target the 1.1155 area before attempting to break the 1.1200 round-figure mark. However, on the downside, the 1.1065-1.1060 zone acts as immediate support, followed by the pivotal 1.1000 level. A break below the descending trend-channel support at 1.0975 could trigger aggressive selling, leading the pair towards sub-1.0900 levels.
In conclusion, the EUR/USD pair is building on its recent bounce from a multi-week low, with USD weakness and positive market sentiment driving the bullish momentum. Traders are closely watching for a breakout from the descending channel to confirm the upward move and consider placing fresh bets on the currency pair. The technical outlook suggests potential for further appreciation if the pair breaches key resistance levels, while downside support levels are also closely monitored for any signs of a bearish reversal.
