The EURUSD currency pair has gained 0.64% this week, riding off a wave of bullish sentiment that came off the back of calm restored within the banking sector. Bullish traders will likely trade cautiously ahead of the U.S. Labour market reports, U.S. PCE Index and the Euro Area Inflation due in the coming days.

Technical

The EURUSD currency pair recommenced its uptrend after breaking out of a consolidation zone at the beginning of the week. Support and resistance are located at the 1.07473 and 1.09318 levels, respectively.

With bullish traders currently in the clear, the price will likely move northward, with the 1.09318 level earmarked as a level of interest. If bullish traders’ enthusiasm is unparalleled, a breakout above the resistance level on high volumes could indicate bullish traders are preparing to take the currency pair higher. The next level of interest will probably be set at the 1.10295 level, or the highs of 2023, year-to-date.

Alternatively, if bears find interest at the current price levels, upside price action on weakening volume could signal the beginning of a reversal. Bears will likely look to the 1.07473 level as a take-profit level if a selloff occurs.

Summary

Traders will probably be inclined to take direction from the inflation readings in the U.S. and Euro Area as they determine whether further interest rate hikes will support the Greenback or the Euro. According to the CME FedWatch Tool, traders now expect a 43.5% chance of a rate hike by the Federal Reserve, while the European Central Bank is fixed on fighting inflation with higher interest rates. The EURUSD will likely be bound between the 1.07473 and 1.09318 levels in the short term as traders navigate through the week.

Sources: Reuters, TradingView