The EURUSD currency pair bulls have enjoyed four weeks of gains which seem to be coming to an end, with the current week down 0.27%.
U.S. Economic data pointed to a slowdown in the biggest economy in the world, sending the pair higher on expectations of a probable Fed Pivot toward the end of the year. Traders are now pricing in a 72.59% chance of the Federal Reserve easing rates by the end of the year compared to over 90% a week ago. Across the Atlantic, the European Central Bank (ECB) has raised its fists against inflation and reiterated its commitment to lowering it to within the 2% target.
The EURUSD currency pair has traded in an undisputed uptrend, forming an ascending channel pattern while the price moved further from its 100-day moving average. Support and resistance were printed at the 1.08330 and 1.10724 levels, respectively.
Following a retracement from resistance, the pair found support at the 61.80% Fibonacci Retracement Golden Ratio and has since attempted to test the level without moving lower, suggesting the presence of bulls. If bullish traders defend the level, they could take the pair higher with the 1.10724 level earmarked as a probable level of interest.
Alternatively, a high volume breakout below the Golden ratio could indicate bears outdoing bulls with a leg down likely. Bears will likely look to the 1.08330 level with interest if they commit to the downside.
The Euro Area Composite PMI Flash came in at 54.4, above consensus and last month’s reading of 53.7. Due to the higher PMI reading, the ECB will likely hike rates further as it looks to tame inflation by slowing its economy. The 1.10724 level is probable if bulls commit to the upside on expectations of higher Eurozone rates and a likely Fed Pivot in the medium term.
Sources: Reuters, Koyfin, TradingView