The dollar has been under continuous pressure since last Thursday, with the exchange rate of the dollar against the euro and the pound nearing its lowest point in over a month.
Overall, we can confirm that since April 16, the dollar has shown a downward trend against a basket of six major developed country currencies. This momentum has become more noticeable since the first few days of May, despite seeing a few days of dollar strengthening.
FxPro Senior Analyst Alex Kuptsikevich pointed out: Earlier this week, the euro made a significant technical breakthrough against the dollar. Besides the accelerated upward trend, in the past two days, the major currency pair has consolidated above the 50-day and 200-day moving averages, which have almost coincided since early April.
The euro has been rising against the dollar over the past month and has nearly fully recovered to the local peak of early April. If one thinks the dollar can easily appreciate while it is slowly depreciating, they are mistaken. Considering trading volume, we see significant net selling of the dollar because the liquidity needed for the dollar to crash in two days is much less than that needed to form a steady upward trend over a month.
Thus, the euro successfully endured another test of the 1.05-1.06 support area, which has been under selling pressure since early 2023. The first important target for this rise looks to be the upper limit of the significant 1.10 range in this round. Or even higher—to 1.1150, attempting to break through the 200-week moving average, which the euro has turned towards thrice since early 2022.
For the bulls, a more ambitious but realistic task might be solidifying a new attempt above the 1.20-1.25 area, a crucial historical zone that served as support during 2004-2014 and as resistance over the past decade.
The euro will likely continue to grow above 1.0860 (April's high), confirming a bullish reversal for the euro against the dollar. This further upward capacity will break the downward trend formed since the last few days of last year.
