It looks poised to breach the 1.1000 mark and retest the YTD high

• EUR/USD regains positive traction on Friday amid USD selling.
• Bets on a Fed rate cut, along with a positive risk tone, are undermining the safe-haven Greenback.
• The technical setup favors the bulls and supports the outlook for a new appreciation move.

EUR/USD is building on the overnight bounce back from the 1.0950 area and gaining some further traction on Friday, although it appears to lack bullish conviction. Spot prices are holding on to modest intraday gains in the early part of the European session and are currently trading around the 1.0985 region, up just over 0.10% for the day.

The US dollar (USD) is struggling to capitalize on the positive move inspired by Thursday’s US macro data amid expectations that the Federal Reserve (Fed) will begin its rate-cutting cycle in September. Apart from this, a positive tone in global equity markets is undermining the safe-haven Greenback, which in turn is seen to provide some support to the EUR/USD pair.

From a technical perspective, Thursday’s late bounce from the 1.1950 resistance threshold point, now turned into support, favors bullish traders. Furthermore, the oscillators on the daily chart remain in positive territory and are still far from overbought, suggesting that the path of least resistance for the EUR/USD pair is to the upside and supports the prospects for further gains.

Hence, further strength beyond the psychological 1.1000 mark towards challenging the YTD top near the 1.1045-1.1050 region reached on Wednesday seems a distinct possibility. Some further buying will be seen as a new trigger for bullish traders and pave the way for a move towards retrieving the 1.1100 level for the first time since December 2023.

On the other hand, the 1.0950 resistance turned support should continue to protect the downside immediately ahead of the 1.0920 horizontal zone and the 1.0900 mark. Some further selling below the 1.0880 level could expose the 200-day simple moving average (SMA), currently pegged near the 1.0835 region before EUR/USD drops to the 1.0800 level.

The latter coincides with the 100-day SMA and should act as a key pivot point. A convincing break below will suggest that spot prices have formed a short-term top and will change the short-term trend in favor of bear traders.