EUR looking to continue its bullish trend ahead of FOMC and ECB meeting

The Euro is steady going into the European session last week and is looking to notch up a fourth straight monthly gain after making a 20-year low last September.

While The US Dollar losing ground across the board has aided the rally thanks to perceptions that the Federal Reserve might be less aggressive in its tightening regime.

The move up for EUR/USD has also received some tailwinds from the European Central Bank (ECB) stepping up its fight against inflation. In addition, with employment data to come out of the USA softer data may support a more dovish Federal reserve.

In the previous few days and weeks, the EUR has seen some strong momentum on the back of growth data that has seen the region avoid a recession. Crucially, the GDP of the Eurozone grew by 0.1% which beat an expected 0.1% retraction for the quarter. A general weakening of the USD has also supported a bounce of the EUR as money has moved away from the safety of the greenback and into other assets.

Technical Analysis

When it comes to the long-term analysis, the price has mostly ranged between 1.04 and 1.25 except when the price bottomed last year. The price is currently showing some weakness and has so far been unable to break through 1.09 and has sold down on candlesticks that are testing the 1.09 level. Therefore, it would not be surprising to see the price retrace to the previous support level at 1.06 before another move to the upside.

On the daily price chart, the price is showing a strong upward channel/trend. This channel shows how the bottom of the channel fall along an important area of market structure. This zone acts as the 50-day moving average, the recent support level and the bottom of the channel. This bolsters this region as a zone for ana entry should the price retrace. With a target of 1.12 this represents a risk reward of 2.5.

Ultimately the trend of the EUR will most likely be dictated by the movements of the Federal reserve and the ECB. However, should the macroeconomic factors permit, the EUR could very well continue its run.