The recovery of the euro against the US dollar has been remarkable, with the pair benefiting from expectations that interest rates in the US will start to be reduced at a faster pace.
Nevertheless, the behavior of US yields and equities is also supporting a weakness of the dollar, which could begin transitioning into a new cycle.
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Technical Analysis
When we look at the chart of the dollar index, we can see that the upward trend has clearly slowed down in recent times, with the index approaching the levels seen in November 2023.
USDIDX Daily Time Frame chart. Source: xStation 5
EUR/USD, daily time frame chart. Source: xStation 5
On the other hand, when we analyze the EUR/USD chart, we can see that the price has broken through an important technical zone—marked by the downward trend line that has been in place since July 2023.
Given the current context, it seems that the euro could appreciate even further against the US dollar, especially if it continues to trade above the recently broken trend line.
Currency Strength Chart. Source: Currencystrength.com
Henrique Tomé,Senior Analyst at XTB Portugal
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
