EUR/USD Price Analysis: Bulls await move beyond 50% Fibo. hurdle, around 1.0755-60 area
|- EUR/USD gains strong positive traction after the first round of France's snap election.
- September Fed rate cut bets undermine the USD and contribute to the strong move.
- The technical setup supports prospects for a further intraday appreciation for the pair.
The EUR/USD pair builds on last week's rebound from the 1.0665 region, or a nearly two-month low and gains strong positive traction for the third successive day on Monday. The momentum lifts spot prices to the 1.0760 area, or a two-week high during the Asian session and is sponsored by a combination of factors.
Exit polls showed that Marine Le Pen's far-right National Rally (RN) party won the first round of France's snap elections on Sunday, though by a smaller margin than projected. This, in turn, provides a goodish lift to the shared currency, which, along with some follow-through US Dollar (USD) selling, fueled by rising bets for a September rate cut by the Federal Reserve (Fed), acts as a tailwind for the EUR/USD pair.
From a technical perspective, strength beyond the 100-period Simple Moving Average (SMA), along with positive oscillators on the 4-hour chart, favour bullish traders and support prospects for additional gains. Some follow-through buying beyond the 50% Fibonacci retracement level of the 1.0910-1.0666 downfall could lift the EUR/USD pair beyond the 50% Fibo. level, towards the 1.0800 mark, or the 200-period SMA.
The latter is closely followed by the 61.8% Fibo. level, around the 1.0815 region, which if cleared decisively will suggest that spot prices have formed a near-term bottom and pave the way for additional gains. The subsequent move up could extend further towards the 1.0855-1.0860 intermediate hurdle en route to the 1.0900 round-figure mark.
On the flip side, any meaningful slide now seems to find decent support near the 1.0720 region, or the 23.6% Fibo. level, ahead of the 1.0700 mark. Failure to defend the said support levels might expose last week's swing low, around the 1.0665 area, below which the EUR/USD pair is more likely to prolong its recent well-established downtrend witnessed over the past four weeks or so.
EUR/USD daily chart
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The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
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