- EUR/USD gains positive traction as the USD drifts lower in reaction to the US-Iran peace deal.
- The ECB’s rate hike signal supports the Euro, while hawkish Fed bets should limit USD losses.
- The bearish technical setup warrants caution before positioning for any further appreciation.
The EUR/USD pair attracts some buyers during the Asian session on Thursday and moves away from its lowest level since late March, around the 1.1480-1.1475 region touched the previous day. The intraday move up is sponsored by a broadly weaker US Dollar (USD) and lifts spot prices to a fresh daily high, around the 1.1525 area in the last hour.
The US-Iran deal, aimed at ending hostilities and reopening the Strait of Hormuz, boosts investors’ confidence and prompts some USD profit-taking following Wednesday’s strong move up to a fresh high since late March. Furthermore, the European Central Bank’s (ECB) hawkish signal lends some support to the shared currency and the EUR/USD pair. However, rising bets for a rate hike by the US Federal Reserve (Fed) in December could limit USD losses and cap the currency pair.
From a technical perspective, spot prices hold well below the 200-period Simple Moving Average (SMA) on the 4-hour chart and keep a bearish near-term tone. Adding to this, the Moving Average Convergence Divergence (MACD) indicator is in negative territory, while the Relative Strength Index (RSI) hovers around 38. Momentum indicators together suggest that downside pressure persists even as the EUR/USD pair attempts to stabilize above the recent swing lows.
Hence, any subsequent move up is more likely to confront a hurdle near the 1.1575-1.1580 horizontal support breakpoint ahead of the 1.1600 round figure. Meanwhile, the 200-period SMA at 1.1638 should act as a strong barrier that bulls would need to reclaim to ease the current bearish bias and open the door to a more sustained recovery. On the downside, acceptance below the 1.1500 mark would expose the EUR/USD pair to further weakness as momentum remains skewed to the downside.
