Eurusd Resumes Recovery

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Eurusd Resumes Recovery

Eur/Usd Resumes Recovery Despite Hawkish Fed

EUR/USD has started its recovery phase from the 1.0830 handle on Friday. This was a surprising move as the Fed has maintained a hawkish policy stance.

little earlier, comments from the Fed officials allowed the USD to gain some momentum, which was lost due to the inflation numbers. However, it seems that the downtrend is now back on track for the greenback after speculations that the Fed will cut rates starting from September.

Ecb Hesitant About Rate Cuts

It is important to note that the Fed has made no comments which even hint at a possible rate cut. However, the market sentiment regarding the rate cuts has improved after the recent CPI reading.

While the USD has made some recovery, the EUR also remains steady on strong demand. Even the European Central Bank (ECB) has cast some serious doubts on whether it really needs to extend the cycle of rate cuts.

In simple words, the ECB believes there is little need to cut rates after June's rate cut. So, that's the fundamental situation that has allowed the EUR/USD to resume its uptrend once again.

Earlier, an ECB board member talked about how the path ahead is uncertain after the June rate cut. She also talked about how the disinflation process is not without difficulties, which also means potential upside risks arising from early rate cuts.

All of this has allowed the EUR/USD to recover and make its way towards breaking out of a triangle chart pattern near the 1.0830 handle. In the short-term, the EUR/USD remains bullish amid wider ticks and healthy buying volume.

In fact, the EUR/USD has already formed a strong base above the 200 and the 50 SMA which are found near the 1.0788 and the 1.0780 handles.

It seems even the RSI (14) hints at an upside in the EUR/USD as it is in the 60 - 80 range, which is bullish territory. Looking forward, the EUR/USD will likely continue its march towards the next resistance at 1.1000.

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