Technical Analysis

EUR/USD Analysis – June 22, 2021

By LonghornFX Technical Analysis
Jun 22, 20214 min

Fed Chair Powell Testifies Ahead!

The EUR/USD was closed at $1.1912 after placing a high of $1.1921 and a low of $1.1848. EUR/USD recovered some of its previous losses on Monday as buying interest in the currency pair remained well and sound. The EUR/USD currency pair extended its rebound from the multi-week lowest level near the mid-1.1800 level recorded earlier on Monday. Some suggested that it was a price correction, and some said it came in after the broad-based improvement in the market's risk sentiment.

Another reason behind the upward momentum in the single currency Euro was the rising key German 10-year yields that gathered extra strength and reached the -0.17% zone. There was nothing from the macroeconomic docket from both sides; however, the declining prices of the U.S. pushed EUR/USD pair higher on the board. The European single currency remained high against the U.S. dollar after the President of the European Central bank said that the Eurozone and the United States were in a different situation regarding the inflation outlook and played down any impact across the Atlantic.

Federal Reserve has started discussing ending their bond purchases program with the U.S. economy reopening and the fast rebounding prices. Last week, the central bank officials brought forward their expectations for the first-rate hike since the start of the pandemic, which triggered the market speculation about rising inflation and a tightening of monetary policy across the globe. However, Lagarde rejected comparisons between both economies and said that the U.S. recovery was farther ahead of the recovery of the eurozone economy. The United States and Europe were clearly in a different situation as it was tempting to compare but not very reasonable given the many differences between the two economies.

On the other hand, the U.S. dollar remained weak across the board on Monday as the U.S. Dollar Index that measures the greenback value against the basket of six major currencies, fell and reached 91.83 level and pushed EUR/USD currency pair higher. Furthermore, the U.S. dollar came under pressure ahead of the testimony of the U.S. Federal Reserve Chief Jerome Powell on the Fed's emergency lending programs and current policies before the House Select Subcommittee on the coronavirus crisis.

Furthermore, the experts at Goldman Sachs have laid down their expectations for an expected recovery in the eurozone region and highlighted when they believe the European Central bank will lift its unprecedented stimulus measures while suggesting that the austerity measures might no longer be relied upon. According to the chief European economist at Goldman Sachs, the latest position from the Fed should make the ECB Governing Council more confident that it can start to reduce the PEPP purchases later this year. These comments added strength to the single currency Euro and supported the rising prices of the EUR/USD pair.


EURUSD Intraday Technical Levels**

Support Resistance

1.1858 1.1881

1.1844 1.1890

1.1835 1.1904

Pivot Point: 1.1867

EUR/USD - Technical Outlook

The EUR/USD consolidates at the 1.1898 level, facing immediate resistance at the 1.1916 level that's extended by 23.6% Fibonacci retracement level. The direct currency pair is gaining support at the previously placed low level of 1.1848 level. On the 4-hour timeframe, the EUR/USD pair has closed a Doji pattern below the 1.1916 resistance level, suggesting the possibility of bearish pressure on the EUR/USD pair. The MACD indicator supports a strong selling bias. However, the EMA is still far away from the current market price level of 1.1888. This demonstrates the oversold situation of the EUR/USD pair. A bullish breakout of 1.1889 level can expose the pair towards 1.1975 and 1.2010 levels. All the best!


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