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Euro Rebound Analysis: EUR/USD, EUR/JPY, EUR/GBP Scenarios

Euro potential rebound was analyzed for EUR/USD, EUR/JPY, and EUR/GBP. Key support levels and outlook discussed.

Euro Against US Dollar, Japanese Yen, British Pound – Analysis

  • EUR/USD is currently testing robust support levels, suggesting it may be oversold.
  • EUR/GBP is striving to surpass a minor resistance level.
  • EUR/JPY appears to be under pressure.

Euro Rebound Analysis – EUR/USD, EUR/JPY, EUR/GBP Scenarios

What is the prognosis for key Euro currency pairs, and what are the critical levels to monitor?

The euro is showing signs of being deeply oversold and could potentially recover some recent losses against select currencies, especially in anticipation of the upcoming US Federal Reserve interest rate decision. The sustainability of this rebound, however, remains uncertain.

Supporting the euro’s current strength are hawkish remarks from several European Central Bank (ECB) officials, and a potential pause by the Federal Reserve could provide a much-needed boost. Last week, the EUR faced downward pressure after the ECB raised interest rates but hinted that policy rates might have reached their peak. Currently, money markets estimate a 25% chance of one more ECB rate hike by year-end.

Meanwhile, the US central bank is expected to maintain a steady federal funds rate this week. Fed Chair Powell is likely to adopt a balanced stance, emphasizing the importance of data in shaping near-term policy decisions. All eyes will be on the Summary of Economic Projections (SEP), released alongside the September FOMC statement, particularly focusing on the 2023 and 2024 median policy rate forecasts.

Nevertheless, for any rebound to be sustainable, the economic growth outlook for the Eurozone needs improvement. The US’s superior economic performance has been bolstering the US dollar globally as monetary policy expectations align.

EUR/USD Testing Key Support

From a technical standpoint, EUR/USD is currently testing a significant support level at the June low of 1.0633. After consecutive weeks of decline, oversold conditions, and a positive reversal on the weekly charts, the chances of a short-term rebound have increased. This support level is sturdy and is unlikely to break easily, at least in the initial attempt.

However, the pair lacks upward momentum. On the 240-minute charts, breaking above the initial resistance at last week’s high of 1.0770 is necessary to diminish immediate downside risks. An even more substantial development would be a breach of the August high at 1.0945, potentially signaling the end of the two-month downtrend.

EUR/GBP Demonstrating Strength

EUR/GBP is showing signs of strength as it strives to surpass minor resistance at the August high of 0.8610. While this is important, a breakthrough above the July high of 0.8700, coinciding with the 200-day moving average, would carry greater significance. Such a breakthrough could open the path toward the April high at 0.8875.

EUR/JPY Under Pressure

EUR/JPY is currently testing a robust horizontal trendline support level from August, approximately at 156.85-157.00. As previously noted, a break below this level could trigger a double top pattern, with a potential price target of around 154.00. However, as long as the currency pair remains above the July low of 151.50, it is unlikely to pose a significant threat to the broader uptrend in EUR/JPY.

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