Euro Watch: EUR/USD Resistance, EUR/GBP Eyes Multi-Week High

Euro strengthens against US dollar, testing resistance; EUR/GBP rebounds, eyes multi-week high amid overbought conditions.

EUR/USD and EUR/GBP Analysis

Euro (EUR) trading dynamics have been notable, with EUR/USD hovering around 1.0800, buoyed by weakness in the US dollar. Meanwhile, EUR/GBP has bounced off support levels and stands ready to achieve a fresh multi-month high.

The economic calendar for the week ahead features several significant releases, including the latest Euro Area and German Purchasing Managers’ Index (PMI) reports, the German Ifo business climate index, and final figures for Euro Area inflation and German Gross Domestic Product (GDP). Additionally, market participants are keenly awaiting insights regarding their economic perspectives from various European Central Bank (ECB) board members. Furthermore, market participants will closely watch for releasing the latest minutes from the US Federal Open Market Committee (FOMC) meeting.

Heading into the US trading session, the Euro is slightly higher against the US dollar, while the greenback is marginally weaker. The US dollar index currently stands around 104.20, reaching a multi-week high of 105.02 the previous Wednesday. In contrast, EUR/USD has climbed from its recent lows near 1.0700 and is now testing the 20-day simple moving average at 1.0795. Should the pair sustain its momentum, the following resistance levels are at 1.0826, corresponding to the 200-day SMA, and 1.0862, aligned with the 23.6% Fibonacci retracement level.

Euro Watch: EUR/USD Resistance, EUR/GBP Eyes Multi-Week High

Meanwhile, EUR/GBP has experienced a robust rebound from support levels around 0.8500. Breaking through the 20-day SMA at 0.8538 and a former support-turned-resistance level at 0.8549, the pair now sees the 50-day SMA at 0.8588 as its next resistance hurdle. Notably, the Commodity Channel Index (CCI) indicator suggests that EUR/GBP is overbought territory, reaching its highest level since late October of the previous year.

As reflected in IG retail trader data, market sentiment indicates that 67.52% of traders are net-long on EUR/GBP, with a long-to-short ratio of 2.08 to 1. Notably, there has been a slight increase in net-long traders compared to the previous day, although the figure remains lower than the last week. Conversely, net-short traders have seen a notable uptick daily and weekly.

In summary, the Euro shows resilience against the US dollar, with EUR/USD testing resistance levels. At the same time, EUR/GBP exhibits strength as it aims for a multi-week high, albeit amid some indications of overbought conditions. Market participants await critical economic data releases and central bank commentary for further direction in Euro trading.

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