The EUR/USD demonstrated significant strength during Wednesday's trading session, indicating an attempt to surpass the crucial 1.11 level. A successful breakout above this level would pave the way for further gains. Notably, the Core Consumer Price Index (CPI) reading in the United States revealed a 0.2% increase, slightly below the expected 0.3%. While this suggests a potential cooling of inflation, it remains higher than initially anticipated.
Currently, the market is making every effort to break out, and if the 1.11 level is surpassed, it is likely that the euro will continue to ascend, possibly targeting the 1.15 level in the longer term. Although there is a possibility of a "risk-off event," such concerns appear to be diminishing for the time being. In the event of a systemic shock, the US dollar typically serves as a safe haven. However, unless negative headlines emerge, the market is expected to find reasons to sustain its upward trajectory.
Beneath the current levels, the 50-Day Exponential Moving Average near the 1.09 mark is expected to provide support. Given sufficient time, buyers are likely to step in and bolster the market at that level. However, the rapid pace of the market's ascent suggests that reaching such levels is increasingly unlikely. Consequently, this reinforces the notion that the US dollar is poised for a decline. Such a scenario would not only benefit the euro but also other major currencies such as the British pound and the Swiss franc. Furthermore, this sentiment could extend to the gold markets, which are also experiencing a positive day. It is worth noting the positive correlation between gold and the euro, as both are considered alternatives to holding US dollars. Consequently, buying on dips is expected to remain the prevailing strategy moving forward.
- The euro displayed notable strength as it rallied during Wednesday's trading session, signaling a potential breakout above the 1.11 level.
- The market's determination to surge higher, coupled with lower-than-expected US inflation figures, adds weight to the argument for further euro appreciation.
- Key support at the 1.09 level, marked by the 50-Day EMA, is likely to attract buyer interest.
The anticipated fall in the US dollar not only benefits the euro but also other major currencies and potentially spills over into the gold markets. Going forward, the prevailing strategy of buying on dips is expected to continue as the euro maintains its upward momentum.
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