EURUSD: Bulls Lack Enough Momentum to Break Critical Resistance

EURUSD has reached a fresh 19-month low after the bulls lacked enough momentum to break the resistance at $1.1150. Prior to the Fed interest rate decision released on Wednesday, the markets were pricing in four rate hikes over the course of the year.

However, following the central bank’s hawkish stance, investors are now betting on five or more increased by the end of 2022. Subsequently, the US dollar has continued to rally against major currencies.

The dollar index, which tracks the value of the greenback against a basket of six major currencies, is at its highest level since June 2020. At the time of writing, it was at $97.34, having rallied by 1.49% in about 24 hours. The US dollar is also rallying against other currencies such as the Pound and the Canadian dollar.   

EURUSD technical analysis

On Thursday, the currency pair extended its previous losses; dropping to 1.1131. The intraday low is its lowest level since the beginning of June 2020. Since the beginning of the week, it has plunged by 1.73%; dropping by about 1% on Thursday alone.

Earlier on Friday, EUR/USD bounced back to around 1.1150 before returning on its downtrend.  As at 07:33 a.m UTC, it was at 1.1129.

Looking at a four-hour chart, the bearish outlook is likely to continue in the short term as the currency pair remains below the 25 and 50-day exponential moving averages.

In the immediate term, I expect the pair to find support at the day’s low of 1.1125. Further decline will have the bulls defend the support at the psychologically crucial level of 1.1100.

On the upside, the resistance level at 1.1150 will be one to look out for as the week comes to an end. Past that critical level, the bulls will have an opportunity to push the pair back to the prior support zone of 1.1200. However, there will need to be enough momentum to break the resistance at 1.1162.