Market Analysis

EUR/USD Pulls Back After Hitting New Highs, Faces Resistance at 1.1201

Dupoin · 27 Aug19.8K Views

EURUSD

Forecast: Potential Decline

Fundamental Analysis:

After several weeks of upward momentum, EUR/USD encountered some selling pressure, pulling back slightly after reaching fresh highs just above 1.1200 earlier this week. This correction came amid a modest resurgence in demand for the US Dollar (USD). The USD rebounded from its recent 2024 lows around 100.50 (as of August 26), reflected in the US Dollar Index (DXY). The Greenback’s recovery was supported by a dip in risk appetite, following Friday’s strong performance driven by Chair Jerome Powell’s dovish comments at the Jackson Hole Symposium.

Technical Analysis:

On the upside, EUR/USD may challenge its 2024 peak of 1.1201 (recorded on August 26), followed by the 2023 high of 1.1275 (reached on July 18). On the downside, the pair's next target is the weekly low of 1.0881 (seen on August 8), followed by the critical 200-day SMA at 1.0848 and another weekly low of 1.0777 (from August 1). The broader uptrend remains intact as long as the pair stays above the 200-day SMA. However, the four-hour chart indicates a slight weakening in the bullish momentum. Initial resistance is at 1.1201, with further resistance at 1.1275. Support levels include 1.1098, followed by the 55-SMA at 1.1078, and then 1.0949. The relative strength index (RSI) has declined to around 62, signaling reduced bullish momentum.

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