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EURUSD Stable Above 1.0840 As Dollar Profit Taking Provides Propulsion

EURUSD rose on Tuesday as dollar holders took profit amid weaker fundamentals. The pair traded at 1.0854, after gaining 0.16% at press time, building on Monday’s gains of 0.28%. The dollar’s weak position is underlined by Monday’s lower-than-expected new home sales data. In addition, the dollar’s safe haven appeal has dissipated on the back of the UN Security Council’s ceasefire resolution.

The US economy reported a decline in its New Home Sales numbers in February, with 662k homes against a forecast figure of 675k.  This pulled back gains made by the US dollar following the issuance of 1.524 million permits, higher that the expected figure of 1.518 million.

While the Eurozone monetary policymakers have not defined the number of cuts they foresee in 2024, the Federal Reserve is expected to implement three rate cuts. This is seen as dovish for the dollar, and will provide tailwinds for EURUSD in the mid-term. Meanwhile, ECB policymaker Madis Muller stated that the Eurozone is getting closer to its 2% inflation target, reiterating the position that the ECB will have adequate data to take a decisive action in June.

The absence of high-impact data from the Eurozone on Tuesday means that EURUSD ‘s trajectory will largely depend on the US Durable Goods Orders data. However, it is also probable that some investors will opt to lock in their near-term profits ahead of Thursday’s US GDP announcement. This could trigger a rise in US dollar sales, providing upward propulsion to the EURUSD trading pair.

Technical analysis

The EURUSD trading pair has its pivot at 1.0830, and the buyers will need to maintain the price  above this mark to sustain the upward momentum. A move past the resistance at 1.0865 will provide propulsion to potentially test 1.0880 in extension. Alternatively, a move below the pivot mark will put control in the hands of the sellers. A move below the support at 1.0820 will invalidate the upside view and favour further downside action to test 1.0800.