Relevance up to 09:00 2022-07-30 UTC–4
Early in the American session, EUR/USD is rising, having reached the intraday high of 1.0257 (4/8 Murray). Since July 19, the pair has been testing this level and on more than five occasions has failed to break it. The level has just become strong resistance.
Euro is bullish as it is trading above the 21 SMA and within the uptrend channel. The obstacle in front is the resistance zone of 1.0277 – 1.0240, which could prevent a continuation of the upward movement.
The crucial event for this week is the policy meeting of the Federal Reserve. On Wednesday, a 0.75% hike would be announced, which would take the rate to 2.5%, the peak of 2019. The euro is likely to benefit from this increase since the market has already priced in this hike. Hence, the market is likely to react against expectations and EUR/USD could reach levels of 1.0396 and can even go as high as 1.0498 (6/8 Murray).
From a technical point of view, the recent recovery from the 0.9950 zone, which represents the lowest level since December 2002, stopped at the pivot point of 4/8 Murray around 1.0253.
In the event of a sharp breakout of this zone, the euro is expected to reach the 200 EMA at around 1.0322. A daily close above this level and above 1.0376 (5/8 Murray) would be seen as a good trigger opportunity for the bulls for further gains. The EUR/USD pair could accelerate the bullish momentum and try to recover to the level of 1.0500 in the short term.
Conversely, a break below the 21 SMA and a sharp break below the uptrend channel will nullify any short-term positive trend. A break of 3/8 Murray at around 1.0131 could accelerate the bearish move and return the market to parity. The bearish trajectory could extend again to challenge the low of the year at around 0.9950.
Our trading plan for the next few hours is to expect a pullback towards the 200 EMA at 1.0322 to sell with targets at 1.0253 and 1.0208. The eagle indicator is giving overbought signals and a technical correction is likely in the coming days.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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