Daily Price Outlook
The EUR/USD pair is currently trading at $1.0623, representing a low point in comparison to the previous day's range. This dip comes after three consecutive days of traders selling the pair short, suggesting a bearish sentiment in the market. It is worth noting that factors such as economic data, central bank decisions, and geopolitical events can all impact the currency pair's value and direction in the short and long term.
German CPI Data on the Horizon
Recent figures show that German consumer prices rose by 1.0% in February, following a decrease of 0.8% in the previous month. This led to a total increase of 8.7% in the yearly total, surpassing January's gain of 8.6%.
The German IFO Business Climate Index rose from 90.2 in January to 91.1 in February. However, the Current Economic Assessment decreased to 93.9 points in February, compared to 94.1 points in January and an expected 95.0 points.
Investors are now anticipating the final year-to-year CPI data, which is scheduled for release on Thursday, February 23, to gauge market sentiment. If the data exceeds expectations, it may further support the ECB's hawkish outlook and potentially drive up the value of the EUR.
US Federal Reserve Officials Discuss Rate Hikes to Meet Inflation Targets
According to the Monetary Policy Meeting Minutes of the Federal Open Market Committee (FOMC), all participants agreed that rate hikes are necessary to meet the inflation target.
On February 22, St. Louis Fed President James Bullard stressed the importance of stabilizing inflation towards 2% this year. Federal Reserve Bank of New York President John Williams also noted that price stability is crucial, and the Fed is focused on achieving the 2% target over the coming years. A few participants even supported a 50 basis points (bps) rate hike.
The US Federal Reserve meeting minutes revealed that officials are committed to taking a more gradual approach to raising interest rates in order to effectively manage inflation, which caused the dollar to rise. As a result, the dollar index increased by 0.40% to reach 104.57, although it dropped off from the day's high.
EUR/USD Trends Lower as Market Awaits US Q4 Prelim GDP Data
Later in the day, a revised figure for US fourth-quarter GDP is expected. If this figure provides further indications of economic resilience, it may give the Fed greater flexibility to continue raising interest rates. The anticipated annualized GDP figure is expected to remain unchanged at 2.9%.
If the US GDP figures turn out to be positive, it may give a boost to the US Dollar Index (DXY). However, it would be premature to predict the impact of this on the pair at this time.
EUR/USD Intraday Technical Levels
Pivot Point: 1.0623
EUR/USD – Technical Outlook
The EUR/USD pair has broken through the double bottom support area at the $1.0625 level, and is now trending lower towards the next support level at $1.0580.
The violation of the descending triangle pattern is usually a signal of a strong bearish market, historically keeping the pair in a bearish trend. However, the EUR/USD pair is showing signs of a potential rebound, as it pulls back to retest the major resistance level of $1.0625.
The RSI and MACD indicators are still indicating a downtrend, along with the 50-day simple moving average holding around the $1.06560 level.
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 Prelim GDP q/q from the US to determine future trends.
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