EUR/USD Surges to 1.2000 Amid Dollar Weakness and Fed Anticipation
Table of Contents
The EUR/USD exchange rate reached 1.2000 on Wednesday, building on gains to 1.2082 the previous evening, marking a sustained four-day rally. Mounting pressure on the US dollar, fueled by comments from former US President Donald Trump and broader political uncertainty, is driving the pair higher.
A key factor in the dollar’s decline is the perception that the administration may be willing to accept a weaker currency to bolster export competitiveness. “The market interpreted this as a signal that the administration might be willing to tolerate a weaker dollar to enhance export competitiveness,” one analyst noted. This sentiment was reinforced by Trump’s assertion that he was “not concerned about the weakening of the dollar,” characterizing the fall as moderate.
Further exacerbating the situation are ongoing political headwinds in Washington, including Trump’s continued criticism of the US Federal Reserve’s independence and renewed discussion regarding Greenland. Adding to the downward pressure, speculation is growing regarding a potential coordinated intervention by the US and Japan to support the Japanese yen (JPY), which has increased demand for the yen.
Investors are now keenly focused on the Federal Reserve’s upcoming meeting, scheduled for later tonight. While a maintenance of the current interest rate is widely anticipated, the market is particularly sensitive to any signals regarding the timing of future rate cuts. Current expectations point towards two 25-basis-point cuts before the end of the year.
Technical Analysis Points to Continued Gains
Technical analysis suggests the bullish trend in EUR/USD is likely to continue, albeit with potential short-term corrections.
On the four-hour (H4) chart, the pair has formed an upward wave towards 1.2080. A decisive breakout above this resistance level would strongly indicate a continuation of the upward trajectory. Currently, the pair is undergoing a corrective phase, with support identified around 1.1935. This correction is corroborated by the MACD indicator, which displays both the histogram and signal line above zero, forming a downward wave. Following this correction, the upward trend is expected to resume, potentially targeting 1.2100 and even 1.2200, though intermittent corrections are anticipated during the ascent.
Examining the one-hour (H1) chart reveals that EUR/USD is also forming a correction after testing resistance. A rebound from the 1.1935 support level would reinforce the continuation of the bullish wave. The Stochastic indicator’s signal lines are approaching the 20 level, suggesting the correction may persist before the upward trend resumes. The next significant target for growth is projected to be 1.2100.
Bullish Momentum Expected to Persist
The EUR/USD pair continues to exhibit strong bullish momentum, underpinned by a weakening US dollar and escalating geopolitical tensions. The current correction presents potential buying opportunities, with further growth anticipated towards 1.2100 and 1.2200, contingent upon the outcome of the Federal Reserve’s decision and broader global market dynamics.
By RoboForex Analytical Department
Disclaimer: Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
