Critical Week for EUR/USD: Technical and Fundamental Drivers

This week will be particularly important for the EUR/USD pair. The euro has held up well despite global indices correcting, preventing the strength of the USD from impacting the pair's exchange rate.

This volatility is expected to remain high, with the release of economic activity data, the NFP, and the ECB's decision to cut interest rates.

Technical Analysis

According to technical analysis, the pair continues to trade above the structure that recently broke, and the 50-period EMA has played a significant role in supporting the upward trend. However, when we reduce the time frame, we notice that the pair has been moving sideways for several days. Given the important events this week, these moments could serve as catalysts to spark new momentum for the euro against the US dollar.

The break of the dashed trend line should be the trigger.

EUR/USD Daily Time Frame chart. Source: xStation 5
 

EUR/USD, 4 hours time frame chart. Source: xStation 5
 

When analyzing the US dollar index, we can see that the bearish structure remains intact, and this week's data could help trigger new momentum, potentially supporting the appreciation of the EUR/USD.

USDIDX Daily time frame chart. Source: xStation 5

Forex Heatmap. Source: xStation 5