EUR/USD Breaks Above Key Levels as US Dollar Weakens
The EUR/USD pair has been on a strong run lately, breaking above the 100-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of its April-June decline. This bullish technical setup is backed by a broadly weaker US Dollar (USD), which is down due to diminished expectations for an immediate interest rate hike by the Federal Reserve (Fed). The EUR/USD pair has gained strong follow-through positive traction, lifting spot prices beyond the 1.1600 round figure.
The USD Index (DXY) has hit a two-month low, and its weakness is acting as a tailwind for the EUR/USD pair. From a technical perspective, the Relative Strength Index (RSI) is near 67, and the Moving Average Convergence Divergence (MACD) histogram is mildly rising, indicating that buyers still have the upper hand.
Risks of overextension might cap the EUR/USD pair near the 200-day SMA at 1.1630, but a sustained break above this band could open the way toward the 78.6% retracement at 1.1732 and ultimately the cycle high near 1.1843.