The EUR/USD pair is experiencing an upward rebound, although it remains cautious in the face of geopolitical conflict and risk aversion. The recent tensions in Israel have led to a surge in demand for the safe-haven US dollar, but as tensions ease, profit-taking in the dollar's recent gains may occur. The pair's rebound gains have not surpassed the resistance level of 1.0616 and have stabilized around 1.0594. The US GDP growth in Q3 has been robust, posing a challenge for US Federal Reserve officials who are considering further policy tightening. Despite forming higher lows and higher highs within an upward channel, the overall trend for the EUR/USD pair remains bearish. [2c5a0b9c]
The risk aversion caused by the geopolitical conflict in Israel could lead to further upside for the safe-haven US dollar, but easing tensions could mean taking profits in the dollar's recent gains. [2c5a0b9c]
With most major events scheduled outside the continent, the direction of the EUR/USD pair looks set to be influenced by external factors. The divergence in central bank expectations, with the European Central Bank (ECB) bringing forward a rate cut to June and the Federal Reserve pushing back its first move to Q4, will play a significant role in determining the pair's performance. The sustainability of the US economy's momentum will also be a crucial factor. Geopolitical developments will contribute to potential volatility, particularly in safe-haven flows. Gap risks may arise upon the resumption of trade on Monday. Given the technical breakdown in EUR/USD on Friday, if the trajectory in both the interest rate outlook and geopolitical landscape is sustained, selling rallies is preferred. [8d4b6ec3]