- EUR/USD struggles to capitalize on modest Asian session move up to a one-week high.
- Inflation fears keep Fed rate hike bets in play, supporting the USD and capping the pair.
- The mixed technical setup also warrants caution before positioning for additional gains.
The EUR/USD pair touches a one-week top on Wednesday, though it lacks follow-through buying and remains below the 1.1600 mark through the Asian session. Moreover, the mixed fundamental backdrop warrants some caution before positioning for any further appreciating move.
Despite the optimism over hopes for an early US exit from the Iran war, reports that the UAE is pushing for military action to reopen the Strait of Hormuz keep geopolitical risks in play. This continues to fuel inflationary concerns and hawkish US Federal Reserve (Fed) expectations, which act as a tailwind for the US Dollar (USD) and cap the upside for the EUR/USD pair.
From a technical perspective, the overnight breakout through the 200-hour Exponential Moving Average (EMA) was seen as a key trigger for bullish traders. Moreover, the Moving Average Convergence Divergence (MACD) indicator eases toward the signal line while remaining marginally positive, suggesting fading but still positive momentum after the advance.
Meanwhile, the Relative Strength Index (RSI) near 66 retreats from overbought readings above 70, indicating cooling upside pressure rather than a clear reversal at this stage. Hence, it will be prudent to wait for a move beyond the 61.8% Fibonacci retracement level of the recent fall witnessed over the past week or so before placing fresh bullish bets around the EUR/USD pair.
A sustained break higher would open the way toward the 1.1599 barrier and then the recent swing high around 1.1641. On the downside, immediate support emerges at the 38.2% Fibo. at 1.1520, reinforced by the nearby 200-hour EMA to form a key demand zone. A deeper setback would expose the 23.6% Fibo. level at 1.1492, where buyers would be expected to defend the broader upswing.
(The technical analysis of this story was written with the help of an AI tool.)
EUR/USD 1-hour chart
