European currencies are rebounding following a recent correction, with EUR/USD and EUR/JPY supported by last week’s interest rate cut by the US Federal Reserve. The Fed’s easing decision triggered a jump in the euro to a yearly high, although some of those gains were quickly pared back. The euro is now showing renewed upward momentum, but the further direction of the trend will depend on whether fresh data from the US and Europe confirm a continuation of the rally or trigger another pullback. In the coming sessions, markets will be watching the release of German business climate indices and US housing market data, which could set the tone for price movements.
After a sharp rise to 1.1920, the EUR/USD pair retreated, losing around 200 points. Nevertheless, buyers of the single European currency found support just above 1.1700, and yesterday’s daily candle closed near 1.1800. Technical analysis of EUR/USD points to a possible continuation of the rise towards recent highs, as a “bullish engulfing” pattern has formed on the daily timeframe. A daily close below 1.1720 could open the way for a deeper correction, with initial targets around 1.1650.
Events likely to influence EUR/USD in the coming sessions:
Last week, EUR/JPY broke a key resistance level at 174.00 and has so far held above it. If the 173.40–173.80 range is confirmed as support, the pair could rise towards last year’s highs at 175.00–175.40. A close below 173.40 could pave the way for a decline towards 172.70.
Events likely to influence EUR/JPY in the coming sessions:
