Wed, April 17, 2024

EUR/USD Struggles Below 1.08 Amid Bearish Signs

EUR/USD - Ahead Of The US CPI Release, The Dollar Rises On High Yields

Quick Look:

  • EUR/USD stays below 1.0800 as the pair trimmed its daily gains, remaining under the significant psychological level.
  • Bearish indicators signal caution as the 14-day RSI and MACD divergence hint at potential downward pressure.
  • Investors await the US ISM Manufacturing PMI and German CPI for further insights.

In Monday’s trading session, the EUR/USD pair maintained its position below the psychological mark of 1.0800, curtailing its intraday gains. The currency duo encountered its intraday high around 1.0780 during the Asian trading hours, signalling a cautious sentiment among investors.

As we delve deeper into the price dynamics, the resistance levels clearly show the hurdles ahead. The immediate psychological barrier stands at 1.0800, closely followed by the Fibonacci retracement level at 1.0818 and the nine-day EMA at 1.0820. A further climb would encounter resistance at 1.0850, with 1.0900 as the subsequent challenge. Conversely, support levels underscore the potential floors for the pair. March’s low at 1.0767 emerges as the initial cushion, with major support at 1.0750, potentially paving the way to 1.0700 if breached.

Bearish Signals: Technical Analysis of EUR/USD

The technical analysis reinforces a bearish sentiment, underscored by the 14-day RSI lingering below the midpoint of 50 and the MACD divergence trailing beneath the signal line. A key bearish trend line marks resistance at 1.0875 on the 4-hour chart, encapsulating the recent decline from the 1.0940 zone. The EUR/USD’s descent below 1.0850 and 1.0820 to a nadir near 1.0767 underscores the mounting resistance near 1.0850. Moreover,  the bearish trend line further affirms the selling pressure at 1.0875.

Furthermore, the immediate support looms near 1.0775. While significant support at 1.0750 could potentially lead to further declines towards 1.0700 or even 1.0650, contingent upon market dynamics. Gold prices have shown resilience, surging above $2,250, with eyes set on potential gains toward $2,265. This movement contrasts with the economic indicators, notably the US ISM Manufacturing Index, forecasted to tick up to 48.4 in March 2024, offering a glimmer of optimism amidst the prevailing caution.

Central Banks and Data: Shaping Euro’s Future

Recent economic data have also influenced the USD dynamics. The US Core PCE for February registered at 0.3% month-over-month and 2.8% year-over-year. The Federal Reserve’s decision to maintain interest rates and anticipate rate cuts by the year’s end adds another layer to the currency equation.

Comments from ECB officials further complicate the narrative. ECB’s Stournaras has hinted at four interest rate cuts in 2024, amounting to 100 basis points. ECB’s Holzmann raised the possibility of Europe initiating rate cuts ahead of the US, contingent on wage and price developments by June.

EUR/USD Outlook: Key Economic Releases Ahead

he financial community stands on the precipice of crucial economic releases, including the US ISM Manufacturing PMI and German Consumer Price Index (CPI), the direction of the EUR/USD pair hangs in the balance. These upcoming data points will undoubtedly provide valuable insights, potentially shaping the trajectory of the pair in the sessions to follow.

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