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EUR/USD Extends Weekly Gains but Momentum Still Lacking

ByAlex Boltyan
Published 03/28/2023, 05:41 PM
Updated 07/09/2023, 06:32 AM

The EUR/USD pair edged higher above 1.0800, extending gains into a second day on Tuesday despite higher U.S. yields limiting its upward momentum. While the U.S. dollar has weakened overall and the risk tone has improved, the pair is struggling to make significant gains.

At the time of writing, the EUR/USD pair is trading at the 1.0845 zone, 0.43% above its opening price.
Banking sector-related concerns have continued to ease. U.S. yields advanced, with the one on the 10-year note reaching 3.57%. Wall Street indexes started the session on a strong footing but then faltered.

Meanwhile, the euro has benefited from hawkish European Central Bank (ECB) expectations. ECB members have continued to reassure that the European banking system is resilient, focusing mainly on battling inflation. In contrast, the Fed is expected to pause its tightening cycle, as according to swap markets, the chances of no hike at the May meeting stand above 60%.

In the U.S., data showed consumer confidence improved in March, with the Conference Board Index rising to 104.2.
On Thursday, several Eurozone countries will publish consumer inflation data, while the U.S. will release the core personal consumption expenditures price index on Friday.

EURUSD Daily Chart
From a technical perspective, the EUR/USD pair holds a short-term bullish outlook, although indicators on the daily chart exhibit a lack of momentum.

On the upside, the 1.0900 area stands as a critical resistance level. A break above could pave the way for a retest of February’s high of 1.1032. On the flip side, support levels are seen at the 1.0750 zone, followed by the 20-day SMA and the 100-day SMA at 1.0696 and 1.0638, respectively.

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