Technical Analysis

EUR/USD Analysis – February 22, 2023

By LonghornFX Technical Analysis
Feb 22, 20233 min

Daily Price Outlook

The EUR/USD pair is currently trading at $1.0657, reflecting a modest gain of 0.10% over the past 24 hours. This positive movement can be attributed to the rise in market players' risk appetite, leading to a recovery in the value of the currency pair.

EUR/USD Awaits Fed Meeting Minutes

The US dollar has maintained its stability this week following the release of the latest economic data which shows that the US economy is performing better than expected. However, the US Dollar Index started to give back some of its previous gains after the PMI report was released, and the DXY dropped to its low point of 104.02 for the day.

The US DXY is currently facing challenges in its attempt to recover from a recent corrective move, despite the renewed risk-on sentiment among investors. Meanwhile, market participants are eagerly awaiting the release of the Federal Open Market Committee (FOMC) minutes.

In addition, the latest data gives reason for the Fed to pursue a more aggressive Fed rate path. Investors are expecting the Fed to continue raising interest rates for an extended period to reach the desired level of inflation.

The EUR/USD may face increased selling pressure due to today's main news events, which are the FOMC member speeches and the release of the Fed meeting minutes.

ECB Plans to Raise Interest Rates Despite Headline Inflation Slowdown

Christine Lagarde, the president of the European Central Bank (ECB), stated that inflation in the Eurozone is decreasing. However, she reiterated the ECB's plan to raise the key rates by 50 basis points (bps) at the upcoming policy meeting. Lagarde also indicated that the Eurozone is not currently experiencing a wage-price spiral.

Additionally, the Eurozone is scheduled to release the Final HICP Inflation figure for January on February 23, and it might be revised upwards. This development may strengthen the possibility of the European Central Bank raising interest rates by 50 basis points the following month. Moreover, it may reinforce the belief that the ECB will need to implement further measures beyond March.

Therefore, the data released this week could potentially benefit the Euro bulls.

 EUR/USD Price Chart - Source: Tradingview

EUR/USD Intraday Technical Levels

Support      Resistance

1.0626         1.0686

1.0602         1.0722

1.0566         1.0746

Pivot Point: 1.0662

EUR/USD – Technical Outlook

The EUR/USD pair is currently trading within a narrow range of $1.0665, with support at the $1.0640 level. A downward movement may occur if the immediate support level of $1.0625 is breached, leading to additional selling opportunities until the $1.0615 level.

The RSI and MACD indicators are indicating a downtrend, but the upward trendline is providing support for the pair at the $1.0640 level. The formation of a symmetrical triangle pattern on the 2-hour timeframe suggests that investors are indecisive, possibly due to the FOMC meeting minutes that are set to be released later today.

On the upside, if the $1.0665 level is broken, the EUR/USD pair may move toward the $1.0685 or $1.0725 levels. The market will be closely monitoring the FOMC meeting minutes to determine future trends.


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