The EUR/USD currency pair saw significant gains on Thursday, closing above the 1.0800 level, which ended a streak of losses over the past three days. Although the pair faces challenges in maintaining this upward momentum in early Friday trading, the immediate technical indicators suggest that sellers are currently inactive, allowing for a bullish outlook.
The rise in EUR/USD was driven by a more favorable risk sentiment in the markets, coupled with a decline in US Treasury yields, which diminished support for the US Dollar. As a result, the pair gained traction. However, early indicators show that US stock index futures are holding steady, suggesting a neutral risk environment that may cap further increases for the currency pair.
Looking ahead, the economic calendar for the United States will feature Durable Goods Orders data for September, with expectations pointing to a 1% decline. A better-than-expected report could bolster the US Dollar initially, while a larger drop might weaken its position. However, any market reactions are expected to be brief and may lack the strength to influence the EUR/USD significantly.
As investors prepare for the weekend, the focus will likely shift to shifts in market risk appetite. Should positive sentiment persist, the US Dollar might face continued pressure.
From a technical analysis perspective, EUR/USD has successfully broken free from a descending channel and established itself above the upper boundary. The 4-hour Relative Strength Index has risen above the neutral mark for the first time in nearly a month, hinting at a favorable near-term outlook. Key resistance levels include the 50-period Simple Moving Average at 1.0835 and the critical 200-day SMA at 1.0870. Should the pair stabilize above these levels, it could attract additional buying interest, potentially pushing it toward the 1.0930 level. On the downside, strong support can be found at 1.0800, 1.0760, and 1.0700.
