The euro-dollar pair is experiencing strong gains today, rising over 0.65% and breaking above the psychological resistance level around 1.09. The U.S. dollar continues to weaken, while U.S. Treasury yields have declined. In a statement on its earnings, Delta Air Lines reported that domestic flight demand has weakened, indicating signs of a weakening consumer. The airline's shares are down nearly 10% in pre-market trading.
- Although this information is secondary, it does highlight that concerns about a U.S. recession are not entirely unfounded. Meanwhile, tariffs are likely to slow economic growth and squeeze American household budgets. The U.S. Dollar Index (USDIDX) is down 0.45%.
- The broader economic dynamics of the eurozone and the U.S., combined with expectations of an infrastructure boost in Europe, supported by new defense programs, seem to partially justify the largely speculative movements in the EUR/USD pair.
- Today, U.S.-Ukraine talks have also begun in Saudi Arabia, with Russia set to be informed of their outcomes. We can also expect EUR/USD to react positively in the event of a potential ceasefire agreement and the development of a political consensus on an additional infrastructure-defense program in Germany.
EUR/USD (D1 Chart Analysis)
We observe that EUR/USD halted its decline around the 61.8% Fibonacci retracement of the 2022 bullish impulse, near 1.02. Today, the pair has surpassed the 23.6% Fibonacci retracement, potentially paving the way for a test of the 1.10 - 1.11 range, a historically significant price reaction zone. Key medium-term support remains at the 200-day EMA, reinforced by Fibonacci retracement levels, around 1.066. Volatility may increase around 2 PM GMT, as the JOLTS job openings report from the U.S. labor market is released.
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