EUR/USD technical analysis:

The attached chart highlights the significant role of the 1.1270 level in EUR/USD price movements. A break above this level could signal a positive outlook for the currency pair. We will therefore treat this level as a key resistance that needs to be breached to confirm the bullish outlook, while keeping the following technical points in mind:

  1. A positive divergence is evident when comparing the price chart with the Relative Strength Index (RSI). The RSI is forming higher lows, while price action is showing equal lows.
  2. The RSI has also managed to break above a previous peak, forming a technical pattern known as an RSI Failure Swing, which further supports the positive outlook.
  3. A break above the 1.1270 resistance would confirm a bullish reversal pattern known as a Double Bottom.

In conclusion, we will monitor EUR/USD's ability to break above this resistance and sustain its upward momentum, with the next major resistance target around 1.1385.

EURUSD, Timeframe: Daily, Tools: SMA 100:EURUSD, Timeframe: Daily, Tools: SMA 100:

EUR/USD fundamental analysis:

The US dollar declined against a basket of currencies, reaching its lowest level in a month after preliminary estimates from the US midterm elections pointed to Democrats gaining control of Congress. This raised concerns about tighter regulatory restrictions on the artificial intelligence sector and businesses, alongside efforts to curb government spending to ease inflationary pressures.

However, continued dollar weakness is not guaranteed. A breakdown in geopolitical negotiations could push oil prices higher, potentially keeping inflationary pressures elevated. This, in turn, could increase the likelihood of further US interest rate hikes and provide renewed support for the dollar.