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The EUR has been on a ‘recovery rally’ since it fell below parity level with USD earlier this year. With inflationary pressures potentially easing across the world the USD has finally taken a breath. The currency which has been haven for many market participants in dealing with the high volatility finally saw a dip after weaker than expected US CPI figures last week. Since this time the USD Index or DXY has fallen by nearly 4.5% which is a significant drop. This has had an overall positive impact on currencies that were struggling such as the AUD, JPY and of course the EUR.
Whilst the EUR has provided a positive move in recent weeks and days there is still some geopolitical concerns especially with the news of a missile killing two citizens in Poland earlier this week.
The weekly chart shows that price is currently testing a long terms resistance level at 1.0352. This level acted as support for almost 7 years prior to being broken and therefore has become a significant level. In addition, the price is also fighting against the 50-week moving average which is at 1.0588. The 50 week moving averages is also a short-term long target for long trades.
Looking more closely at the daily chart, the price is showing an important signal that it has not done since May 2020. The price is testing the 200-day moving average. If it can break through it may represent a bullish signal. The last time the price broke through this level it managed to go from 1.10 to 1.23. This time around, the currency pair is having to fight inflationary pressures which may create a headwind. The price action is still showing a potential price target of 1.06 in the near term and if it can break through the 200-day moving average and a longer-term target of 1.15.
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