The EURO has seen a slight decline on Wednesday, trading around the 1.2000 level after reaching a high of 1.2080 the previous day, its strongest point since June 2021. This recent movement follows a broader US dollar weakening, which has been partly attributed to positive comments from the US President regarding the dollar’s depreciation. Such remarks have added to market speculation of a continued sell-off of the USD.
Over the past ten days, the US dollar has depreciated by more than 3.5%, influenced by a combination of geopolitical and domestic factors. These include unpredictable trade policies, rising government spending, and mounting political pressure on the Federal Reserve. Concerns have grown about the Fed’s independence, in part driven by ongoing political efforts to influence its leadership. These developments have weakened the dollar’s position as a global reserve currency.
Investors are also paying close attention to potential intervention strategies by the US and Japan aimed at stabilizing their respective currencies. The upcoming meetings of the Federal Reserve and the Bank of Japan have heightened market caution, especially given recent reports of rate checks by both central banks. These signals have led traders to reduce long positions in USD/JPY , reflecting apprehensions of coordinated intervention efforts to support the Yen.
The focus remains on the Federal Reserve’s upcoming decision, widely expected to keep interest rates steady. However, concerns persist about political interference, including discussions around replacing the current chair with a more dovish successor and ongoing investigations into the central bank’s current leadership. This political environment adds an element of uncertainty to the central bank’s policy outlook.
From a technical perspective, the EUR/USD has encountered resistance near a key Fibonacci extension level, suggesting potential exhaustion of recent gains. Despite some oversold readings, indicators point to possible consolidation, with immediate support seen around 1.1980 and below at 1.190. Resistance levels are identified near recent highs, with the 2021 peak around 1.2165 providing a longer-term target for bullish momentum.
