EUR/USD adjusts to USD weakness

Source: Dukascopy Bank SA


As the EUR/USD was trading between the support zone near 0.9550 and the 0.9600 mark, the Bank of England caused a broad decline of the US Dollar. Namely, the central bank announced that it would reduce its monetary tightening by buying UK government bonds at a total amount of 65 GBP billion. The markets took in the news as the bank capitulating on rate hikes, which was bullish for all risk assets and beat down the US Dollar index.

As a result on the EUR/USD charts a surge up to the 0.9750 level occurred. The 0.9750 acted as resistance and caused a decline. By the start of Thursday's European trading hours, the rate had reached the combined support of the 0.9650 level and the 50 and 100-hour simple moving averages.

An extension of the decline of the Euro against the US Dollar would most likely look for support in the 0.9600 level, before approaching the weekly S1 simple pivot point at 0.9554 and the 0.9550 level. Further below, note the 0.9500 and 0.9450 levels.

On the other hand, another spike upwards by the rate would face resistance in the 0.9700 and 0.9750 levels, prior to reaching the combination of the 0.9800 mark, the weekly simple pivot point at 0.9802 and the 200-hour simple moving average.
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