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EUR/USD Hits Fresh 2-Month High, Time for a Pullback?

EUR/USD Hits Fresh 2-Month High, Time for a Pullback?


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EUR Forecast
EUR Forecast
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READ MORE: GBP/USD, EUR/GBP Outlook Ahead of a Data Filled Week

EUR/USD has breached the psychological 1.1000 handle following a resurgence in US Dollar weakness. Following a bright start to the week for the Dollar, the US session brought a renewed bout of weakness to the greenback which has continued into this morning’s European open. The currency strength chart below is a stark contrast to yesterday which saw the Dollar begin the week as one of the strongest currencies. Are we in for sustained Dollar weakness or is this just a result of positioning ahead of the US CPI release tomorrow?

Currency Strength Chart: Strongest - JPY, Weakest - USD.


Source: FinancialJuice


Yesterday saw a host of Federal Reserve policymakers speak ahead of the Feds latest blackout period. Maintaining a hawkish rhetoric with many agreeing the Fed are not done yet, however markets seem to have latched on to the fact that many agree the hiking cycle is close to its end. This is in part a likely cause of the Dollar selloff experienced in the US session yesterday ad continued into early European trade this morning.

Germany saw an uptick in headline inflation this morning which increased to 6.4% from 6.1% in May. The print was however in line with estimates. The worrying factor in regard to German inflation is that food remained the biggest driver of inflation while Government relief measures from 2022 are also seen as a contributing factor. In May 2023, the consumer price index excluding energy and food stood at +5.4%, the core inflation rate therefore accelerated again in June 2023. In both April and March 2023, the rate also stood at +5.8%.


The Euro calendar remains light in terms of risk events this week with ZEW Sentiment due out shortly with comments from ECB policymaker Villeroy expected as well. Neither of these events should have any material impact on EURUSD at this stage with market participants still pricing in two more 25bps hikes by October. On the Dollar side we also have a quiet day with Fed policymaker Bullard expected to speak before attention turns to US CPI on Wednesday.

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Looking at EURUSD from a technical perspective and we have just printed a fresh two month high after finding support at the 100 and 200-day MAs. Market structure would suggest that a pullback is in order but given the weakness in the dollar there is every chance EURUSD pushed toward the 1.1100 mark ahead of US CPI tomorrow.

As for a potential break of the range high at 1.1100, I think will be down to US CPI tomorrow with a significant miss to the downside likely to facilitate a break higher. Should the CPI come in near expectations I do fully expect the range high to hold and a potential retracement to come into play. It is worth noting that the 100-day MA is starting to hint at a potential golden cross pattern which could hint at further upside, however this is yet to occur. Given that the RSI is still approaching overbought territory a test of the range high certainly remains a possibility.

A retracement from current price faces immediate support around the 1.0950 handle before the 1.0900 level or the moving averages serving as dynamic support come into play. The 100 and 200-day MA resting at the 1.0817 and 1.0858 respectively.

EUR/USD Daily Chart – July 11, 2023

Source: TradingView

Key Levels to Keep an Eye On

Support Levels

Resistance Levels

  • 1.1050
  • 1.1100
  • 1.1187


IGCS shows retail traders are currently SHORT on EURUSD, with 68% of traders currently holding SHORT positions. At DailyFX we typically take a contrarian view to crowd sentiment, and the fact that traders are short suggests that EURUSD may enjoy a short bounce toward the range high before continuing to fall.

Written by: Zain Vawda, Market Writer for

Contact and follow Zain on Twitter: @zvawda

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.