Technical Analysis

EUR/USD Analysis – March 01, 2023

By LonghornFX Technical Analysis
Mar 1, 20233 min

Daily Price Outlook

The EUR/USD currency pair is currently trading at $1.0590, showing an increase of 0.13% over the last 24 hours. The pair rose due to better-than-anticipated inflation data from France and Spain, which raised expectations that the European Central Bank (ECB) would continue to increase interest rates.

France and Spain CPI Reports

On February 28, France and Spain released their inflation numbers, which exceeded the forecasted figures for February. The Consumer Price Index (CPI) readings were 7.2% and 6.1% in France and Spain, respectively. As a result, investors are now betting on the European Central Bank (ECB) to raise its interest rates to a maximum of 4%, due to these high inflation rates.

These higher inflation rates are likely to reinforce the views of ECB policymakers, who argue that more increases beyond the March rate hike are necessary to keep inflation under control. In addition, hawkish statements from ECB officials have further supported this rise. The ECB's Chief Economist, Philip Lane, has stated that the "case for a 50 basis point rate rise in March remains strong," reiterating the central bank's stance.

CB Consumer Confidence

On February 28, a report showed that the CB Consumer Confidence fell from 106 in January to 102.9 in February, which was lower than the expert forecast of 108.5. In addition, the Chicago PMI dropped from 44.3 in January to 43.6 in February, which was below the predicted mark of 45. It is now declining for the second month in a row.

These numbers were lower than what experts had predicted and indicate increased pressure from rising interest rates. As a result, traders are expecting the Federal Reserve to raise the federal funds rate from 525 bps to 550 bps.

The report on consumer confidence, which showed a drop to a three-month low in February, limited the USD's gain. The US Dollar Index is currently trading at 104.87.

 EUR/USD Price Chart - Source: Tradingview

EUR/USD Intraday Technical Levels

Support      Resistance

1.0553         1.0624

1.0528         1.0670

1.0482         1.0695

Pivot Point: 1.0599

EUR/USD – Technical Outlook

The EUR/USD pair encountered resistance near the 1.0650 level and subsequently experienced a clear downward bounce from there. The EMA50 served as a strong resistance barrier against the price, thereby maintaining the validity of the bearish trend scenario on an intraday basis. The next likely support is 1.0515, with subsequent support of 1.0440 in case of a break below the former level.

Therefore, further decline is expected in the upcoming sessions. The price needs to acquire additional negative momentum to surpass the first target and sustain the decline on a longer-term basis. It should be noted that breaching the 1.0650 level will lead to additional gains, with a potential target of 1.0745 before any new attempts at a decline.


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