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Cable struggles below 1.0800 as key support levels loom

May 30, 2024

Key Points:

  • EUR/USD falls below 1.0800: The currency pair dips under a significant threshold, influenced by a strong dollar and higher yields.
  • Technical support in focus: Near-term support levels are crucial as the pair tests critical technical markers.

The EUR/USD pair currently trades below the 1.0800 mark, reflecting a stronger dollar dominating this week’s exchanges due to rising yields. This scenario is dampening the overall risk appetite in the markets and enhancing the dollar’s appeal.

Currently, the EUR/USD is retreating below its 100-day moving average, located at 1.0808. This move highlights the immediate challenge for the pair, as sellers aim to maintain momentum below this level.

Chart showing EUR/USD pair trading at 1.07970 with a trend of 0.02% on a 30-minute timeframe. The image includes moving averages and MACD indicators, reflecting a gradual decline in the pair's value, facing resistance at 1.08044. This image visually represents the EUR/USD struggling below 1.0800 as it approaches key support levels, indicating potential further declines ahead of the European Central Bank's meeting and the upcoming U.S. employment report.

SEE: EURUSD seen trading at 1.07970 on the VT Markets app.

Key support levels near 1.0780 may stabilise EUR/USD

In this vicinity, the pair encounters additional important support levels. The 200-day moving average, represented by the blue line at 1.0786, along with the 61.8 Fibonacci retracement level at 1.0782, provides a technical buffer.

These levels might offer a foothold for buyers aiming to stabilise the pair’s decline.

Breached support zones may affect Cable long term

Should the EUR/USD firmly breach these support zones, we might observe sellers taking a more assertive stance, potentially steering the pair towards further declines. This shift could gain traction especially as we approach the European Central Bank’s upcoming meeting and the U.S. employment report next week.

On the downside, subsequent support is less robust, with the 50.0 Fibonacci level at 1.0748 and the 38.2 level at 1.0713 up next. Sellers could target these levels, particularly aiming for a push towards the 1.0700 psychological mark. The prevailing strong dollar trend could be a temporary effect, not necessarily extending into the following week.

You might be interested: Dollar strengthens ahead of news on global inflation 

As we monitor these developments, traders should remain attentive to these technical thresholds and upcoming economic indicators, which will likely dictate the near-term trajectory of the EUR/USD pair.

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