Tue, Sep 27, 2022 @ 05:15 GMT
HomeContributorsTechnical AnalysisEUR/USD Resumes Climb, Hits One-Year High After Earlier Stumble

EUR/USD Resumes Climb, Hits One-Year High After Earlier Stumble

Despite a euro setback on Wednesday morning after reports that markets may have misinterpreted ECB President Mario Draghi’s Tuesday comments that seemingly hinted at impending ECB tapering, EUR/USD quickly reversed those earlier losses and began to climb once again. This climb extended Tuesday’s dramatic surge above the key 1.1300 level that was initially driven by Draghi’s perceived hawkishness. In the process of extending its rise on Wednesday, the currency pair hit a new one-year high just short of the 1.1400 level.

Contributing substantially to this rise was a further-weakened US dollar that has not been able to make any meaningful rebound or recovery lately despite a recently hawkish-leaning Federal Reserve. In addition, expectations remain that the ECB may make some kind of tapering announcement in the next several months. This speculation over a potentially hawkish turn by the central bank in the wake of Draghi’s comments on rising inflation has helped to keep the euro supported.

Technically, as noted, EUR/USD has confirmed a key technical breakout above the 1.1300 psychological level. This also confirms a continuation of the bullish trend since the beginning of the year. With any further dollar weakness and continued support for the euro above 1.1300, the breakout has a potential to extend towards the next major upside target around the key 1.1450 price region. With any further breakout above that resistance, a further resistance objective can be found at the 1.1600 level, last tested over a year ago in May 2016.

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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