EURUSD continues to rise. due to Powell’s statements. After falling to a new multi-week low around 1.0670, the EURUSD managed to make a comeback. And is currently trading at fresh daily highs over 1.0750. As Fed Chairman Powell stated that the Fed will raise rates in response to firmer data. Stocks rise and the US Dollar weakens.
EURUSD pair continued to trade under 1.0745
In an effort to gain ground, sellers were encountered at the 1.0745 level. As, the EURUSD pair continued to trade underneath it. The 2022 slump’s 61.8% Fibonacci retracement level is at 1.0745. Therefore, the fact that the cross is starting to fall under it should scare bulls.
Even though the pace is weak, technical signals on the graph support a downward continuation. The bearishness of the indicators has diminished despite them crossing respective midlines towards negative territory.
At the same time, dynamic resistance is being provided by the 20 Simple Moving Average (SMA), which is neutral at roughly 1.0840. At roughly 1.0320, the 100 and the 200 SMAs eventually cross, with the shorter crossover occurring first.
EURUSD Four-hour Chart Depiction
The 4-hour chart indicates that bears are in charge of the duo in the near term. Technical indicators started falling again after correcting oversold readings. With the RSI currently hovering around 29 and showing no signs of depletion.
The 20 SMA, which has already crossed underneath the 100 SMA and is much higher than the present level, then turns decisively south.
The 20 SMA, which has already crossed underneath the 100 SMA and is much higher than the present level, then turns decisively south. Some few pip’s above the aforesaid Fibonacci mark, the 200 SMA is inactive. If the price drops underneath the current intermediate support level of 1.0660, a further loss may be anticipated.
Support and Resistance levels
Support levels: 1.0660 1.0615 1.0570
Resistance levels: 1.0745 1.0790 1.0840
The demand for the US Dollar is strong ahead of the speech by United States Federal Reserve (Fed) President Jerome Powell. Which caused the EURUSD cross to prolong its decline and hit a new 3 drop at 1.0969.
The most recent central bank actions as well as the positive jobs figures released previous Friday, each of which signal the Federal Reserve would continue the tighter course, are still being factored into market prices.
The likelihood of a rate drop by year’s end is diminished by regulators’ hints that the terminal rate may be higher than originally expected.
Improved prognosis for the economy and currency of the eurozone
A stronger Eurozone economy and a more assertive European Central Bank are undoubtedly better for the euro. Regarding our base case estimate, it’s highly probable that part of the EURUSD exchange rate decline that had predicted in early 2023.
It won’t actually happen. Additionally, there is a definite upward skew to the risks compared to our Q1-2024 target of $1.13 for the EURUSD exchange rate.
Rate increases will continue, which is good for the Euro.
With the exception of the Bank of Japan and the Turkish central bank. The ECB moved from being among the most dovish central banks to among the most aggressive in just one year.
The hardline reversal in the ECB’s policy position will aid in the ongoing recovery of the Euro, which last year’s subdued ECB divergence caused to fall under parity.
Contrary View is growth risks are in the negative, whereas inflation risks are to the upward.
The market is likely to maintain a pessimistic view of EURUSD spot in light of the ECB’s 75 bps hike and public acknowledgement of the stagflation risks (threats to the negative for growth and to the upward for CPI).
This stagflation notion and the ongoing negative impact of increased European interest rates on the currency are fully consistent with the long-held USD-positive perspective. And, we’ve frequently observed similar market response. As a result, we still expect the EURUSD spot rate to be in the lower 0.90s.
