Wed, May 22, 2024

EUR/USD Dips to 1.0730 Amid Weak Eurozone Data

dollar, euro, Ukraine, eur/usd

Quick Look:

  • EUR/USD below key levels like the 200-day moving average, showing strong selling pressure.
  • German industrial metrics and Eurozone retail trends are key; US Fed commentary is also critical.
  • Supports at 1.0730 and 1.0700; resistances at 1.0765 and 1.0800.

The EUR/USD currency pair faces downward pressure, showing a potential second consecutive daily drop. As of now, the price hovers around 1.0730. A critical observation points to a struggle beneath several technical levels, potentially influencing future trading sessions.

Technical Analysis: EUR/USD Stays Under 1.0800, Watch 200-Day MA at 1.0726

Technical analysis reveals key levels that are pivotal for traders. The 200-day moving average is traditionally a stronghold for buyer interest. It has recently seen a decline, with sellers exerting pressure. The current price failing to breach the 1.0800 mark is strong evidence of the dynamic. Additionally, EUR/USD has dipped below the 100-hour moving average, transitioning the near-term bias to neutral from what was previously an uptrend. The red indicator on charts visually represents this. Meanwhile, the 200-hour moving average stands at 1.0726, marked in blue, and serves as a critical level to watch in the upcoming sessions.

On the support and resistance front, the pair has immediate support at the current level of 1.0730, followed closely by 1.0700, 1.0660, and 1.0630. Resistance levels to watch include 1.0765 and the significant 1.0800 level, increasing to 1.0820 and 1.0842.

The Bollinger Bands show a moderate upward trajectory, suggesting room for upward movements if bullish momentum is regained. However, the Moving Average Convergence Divergence (MACD) barely holds above the zero line, providing a weak buy signal. Stochastic indicators reflect a downturn from the 80 level, indicating bearish momentum is taking hold.

Eurozone Reports: 0.8% Monthly Rise in Retail Sales, Exports Up 0.9%

Economic data from Germany, a significant player in the Eurozone, indicates a downturn, with March’s industrial production decreasing by 0.4% month-on-month and falling 3.3% annually. Industrial orders also decreased by 0.4% monthly and 1.9% annually. Exports have mildly increased by 0.9% and imports by 0.3%, with a healthy trade surplus of 22.3 billion euros, which may offer a cushion to the euro.

In the broader Eurozone, retail sales data shows a moderate improvement, with a monthly increase of 0.8% and an annual rise of 0.7%. These figures could provide some support to the EUR/USD if sustained.

From the US perspective, upcoming speeches from Federal Reserve officials, including Vice Chair Phillip Jefferson and Boston Fed President Susan Collins, are keenly awaited for further direction on monetary policy. Recent comments from Fed officials like Neel Kashkari have highlighted concerns about persistent inflation. Furthermore, he has suggested that interest rates might remain elevated longer than anticipated, affecting USD strength.

The CME FedWatch Tool currently places a 35% probability on unchanged policy rates by September, hinting that the USD might have more upside potential if the Federal Reserve counters the rate cut expectations.

Fed’s Policy Direction Key to EUR/USD’s Future Amid Rate Hike Fears

The EUR/USD pair faces significant headwinds both technically and fundamentally. Traders will closely monitor the aforementioned technical levels and upcoming economic data from the Eurozone and the United States. The currency pair’s future movements will likely hinge on these dynamics, along with broader market sentiment and policy directives from the Federal Reserve.

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