EURUSD's higher low pattern points to a modest rebound
The EUR/USD is catching a modest bid on Thursday morning following the previous session's selling. The immediate outlook seems slightly neutral to bullish, indicating that the bulls are not yet ready to push the currency pair further lower. The pair is currently up slightly, hovering around the 1.1560 level during the early European trading hours on Thursday.*
Losses remain limited amid rising ECB rate hike expectations
Despite the prevailing negative sentiment, the euro's potential for further declines seems limited, as traders are increasingly betting on a rate hike from the European Central Bank (ECB) due to rising tensions in the Middle East. Before the onset of the Iran war, Polymarket indicated only a 12% probability of an ECB rate hike. However, this figure has now surged to 42%, nearly tripling in less than two weeks. Moving ahead, with no major Eurozone or German data releases for the rest of this week except Friday’s Eurozone industrial production figures, the euro’s gains will largely depend on US dollar movements and overall market sentiment.
EUR/USD Forecast: Bulls need to defend the 1.1500 level
Technically, EUR/USD’s upward correction should continue if it holds above 1.1530/00. Bulls are defending the 1.1500 support to prevent increased bearish pressure and potential stronger selloffs. The pair has formed a higher low at 1.1530, supported by strengthening RSI and MACD indicators, signaling short-term bullish momentum.
Looking ahead, if the pair can maintain a position above the 1.1530/00 level, it will advance to the next resistance level at 1.1600, followed by 1.1640. On the downside, support is found at 1.1530 and then at 1.1500. A break and close below 1.1500 could likely increase selling pressure.
* Past performance is no guarantee of future results.
