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The US dollar was broadly stable in mid-week trading but this may just be a respite in the currency’s losing streak in the short term.
- Throughout this week’s trading, the exchange rate of the EUR/USD currency pair was in an upward rebound range, with gains that reached the 1.0871 resistance level.
- Before that, we recommended our valued clients sell the currency pair from the 1.0885 resistance level, and it settled around 1.0833 at the time of writing, which confirms the selling target.
- The current rebound may be affected by the results of the important US economic data, the gross domestic product, and the number of US jobless claims. Tomorrow is the preferred reading of US inflation for the Federal Reserve Bank.
The US dollar index is poised to extend its recent losing streak, according to a new analysis, a move that will provide near-term support for the EUR/USD exchange rate. In this regard, Martin Miller, a market analyst at Reuters, says that: “Forex traders should beware that while the dollar’s decline has stabilized, the downtrend is likely to resume in the coming sessions, especially since the speculative exposed position is not large enough to hinder Such declines.”
The US dollar was broadly stable in mid-week trading but this may just be a respite in the currency’s losing streak in the short term. According to the analyst, the dollar index – a measure of the dollar’s broader performance against a basket of major pairs – sees the 14-week momentum indicator in negative mode. The EUR/USD makes up 57.6% of the Dollar Index, which means that EUR/USD will almost certainly rise in order for the index to extend its decline.
The analyst added that “The fate of the dollar is also linked to the movement of the largest components of its index. The greenback is expected to struggle against the euro and pound sterling, but gain against the yen as risk appetite picks up.” The dollar pair against the yen represents 13.6% of the index, with GBP/USD retaining 11.9%, USD/CAD 9.1%, and USD/CHF 3.6%.
The analyst adds that the structure of the dollar index market is “generally bearish,” and “a clean break below last week’s low of 101,910 will reveal the base of 100,800 2023 for final exploration.” The dollar index is currently trading at 102.59, after it was higher than 105.83 on March 08. and EUR/USD at 1.0849, having been as low as 1.0524 on March 08. The analyst added, “The failure of the US dollar index earlier in March before the 106,140 Fibonacci level, which is a 38.2% retracement from the decline from 114,780 to 100,800 (from 2022 to 2023), still casts a shadow on the dollar’s expectations.”
Ahead of reading German inflation and the announcement of the US economic growth rate and the number of unemployment claims. The price of the EUR/USD currency pair, according to the performance on the daily chart below, the currency pair is walking inside an ascending channel, and returning to the top of 1.0915, which was recorded in the current month’s trading, may push the bulls to test the psychological top 1.10, which supports the strength of the bullish trend.
On the other hand, for the same time period, the support level at 1.0700 will be important for the bears to control the trend again. The Eurodollar will be affected by investor sentiment and the signals of global central banks, especially with concerns about the strength and spread of the banking crisis.
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