EURUSD Rallies to Fresh Session Highs Before Pulling Back Toward Its 200-Day Moving Average
Key Takeaways
- •EURUSD's decline stalled near 1.15733, where the 100-day moving average and the 38.2% Fibonacci retracement of the end-of-July rally converge.
- •A sustained move above the 200-day moving average at 1.16305 would shift the short-term bias toward buyers, while sellers retain control below it.
- •Additional resistance above the 200-day moving average sits at the 100-hour moving average (1.16359) and the 200-hour moving average (1.16558).
- •Treasury Secretary Scott Bessent said the Fed typically does not raise rates in response to supply-shock inflation, softening expectations for tighter Fed policy.
- •Fed-ECB interest rate differentials are a key EURUSD driver, and softer Fed tightening expectations tend to weigh on the dollar.
EURUSD came under sharp selling pressure at the end of last week, and the weakness extended into the start of the new trading week during the Asian-Pacific session. The decline stalled near 1.15733, a level where the 100-day moving average and the 38.2% retracement of the rally from the end-of-July low converged. Buyers stepped in against that key support cluster and drove the price back higher.
The rebound has now carried the pair into a swing area between 1.1613 and 1.16215. A break above that zone would put another important cluster of resistance in focus for buyers:
- 200-day moving average at 1.16305*
- 100-hour moving average at 1.16359
- 200-hour moving average at 1.16558
From a technical standpoint, Friday's sellers still have a chance to stay in control. To do so, they need to keep the price below the 200-day moving average at 1.16305. A move above that level would be a setback for the sellers, tilt the short-term bias toward the buyers, and give traders more confidence in challenging the additional upside levels. The 200-day moving average is widely watched as a divider between longer-term uptrends and downtrends, which is why it often attracts this kind of positioning battle between buyers and sellers when price approaches it.
On the fundamental side, Treasury Secretary Scott Bessent lent support to the rebound when he said the Fed typically does not raise interest rates in response to inflation caused by supply shocks. With higher oil prices representing a supply shock, his comments took some of the edge off expectations for tighter Fed policy. This dynamic matters for EURUSD specifically because interest rate differentials between the Fed and the European Central Bank are a key driver of the pair: softer expectations for Fed tightening tend to weigh on the dollar, which is the quote side of EURUSD. Traders will also be watching whether the pair can hold above the 1.15733 support cluster on any renewed pullback, as that level has now proven to be the line in the sand between last week's sellers and this week's buyers.
Source: ForexLive
