There are fundamental and technical factors that point to much bigger euro gains against the U.S. dollar.
The euro hovered near a one-year high versus the dollar on Thursday, as Europe's resilient economy contrasted with banking contagion risks in the United States, the debt ceiling standoff and a potential recession.
Recent Reuters polls show the market expects the European Central Bank to step down to a 25 basis-point hike on May 4, with at least one more expected after that, while the Federal Reserve will likely deliver a 25 basis-point hike in May but then stay on hold rest of year.
The technical outlook is bullish.
There is now scope for much bigger EUR/USD gains to the March 31 2022 1.1185 (EBS) high.
Fourteen-day momentum remains positive and the tenkan and kijun lines are bullishly aligned.
Meanwhile 1.0959 Fibo support - a 23.6% retrace of the 1.0517 to 1.1096 (March to April) rise - should limit the downside.
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