The EURUSD currency pair lost some ground during the Asian Session as fears of inflationary pressures emerged following the plans by OPEC+ to cut oil output. OPEC+ announced plans to cut output by 1.16 million barrels per day, and analysts now expect crude oil prices to face minimal friction to the upside, with some expecting it to reach the $100 mark.
Traders will be glued to this week’s economic events, with the U.S. S&P Global Manufacturing and Services PMI due and the Non-Farm Payrolls paramount to the week.
The EURUSD currency pair has trended upwards, with price action above its 100-day moving average. Support and resistance were formed at the 1.07473 and 1.09211 levels, respectively.
Following a rejection of the resistance level, price action was directed towards the 61.80% Fibonacci Retracement Golden Ratio at 1.07922. Bullish traders pounced on the level outweighing bearish activity. If bulls continue to outmuscle bears, the pair could surge, with bulls likely aiming for the 1.09211 level.
Alternatively, if inflationary fears dominate sentiment, bears could look to the 1.07473 level with interest if price breaks below the Golden Ratio on high volumes.
With oil prices expected to rise on supply cuts, the markets are now pricing in the possibility of another rate hike by the Federal Reserve. According to the CME FedWatch Tool, 57.3% of traders expect another rate hike. Across the Atlantic, the European Central Bank is fully committed to fighting off inflation and will likely support the Euro. However, risk-off sentiment could dampen the upside potential of the EURUSD.
Sources: Reuters, CME, CNBC, TradingView