EUR/USD Price Analysis – March 06, 2023

Daily Price Outlook

The EUR/USD pair is currently trading at 1.0644. It closed the previous week on a bullish note, providing a positive outlook for traders who are bullish on the pair. Last week, there were positive inflation indicators in the Eurozone, including the CPI and the Harmonized Index of Consumer Prices (HICP), which supported the hawkish stance of the European Central Bank (ECB).

However, the Producer Price Index (PPI) for January showed a drop of -2.8%, which was a concern for the ECB's hawkish attitude as it was predicted to decline by only 0.3%.

On Friday, Botjan Vasle, a European Central Bank's (ECB) Governing Council member, expressed his belief that the 0.5 percentage point hike planned for the March meeting will not be the final one. Similarly, Madis Muller, another ECB Governing Council member, also suggested that there may be further interest rate increases in March. However, ECB Vice President Luis de Guindos stated that future interest rate decisions depend on the data.

As a result of the hawkish statements from ECB officials, the Euro has seen a rise in market sentiment regarding rate increases. Additionally, traders are currently awaiting the Eurozone Retail Sales report for February, which may limit the rapid movements of the EUR/USD pair.

US Economic Concerns Affect EURUSD Pair Trading

The US data released last week has increased uncertainty about the hawkish Federal Reserve's (Fed) concerns. The US ISM Services PMI for February was 55.1, below market expectations of 55.2. The US Durable Goods Orders for January fell earlier in the week, and the CB Consumer Confidence showed negative results.

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, has raised concerns about the Fed's policy reversal and speculated that the bank might be able to halt the tightening cycle by mid-to-late summer. However, the US Federal Reserve's semi-annual Monetary Policy Report explicitly stated that raising the Fed funds rate goal is necessary. The Fed is committed to getting inflation back to 2%.

Despite the US monetary policy report's emphasis on continuing rate hikes, the US Dollar Index (DXY) is currently trading lower at 104.53, indicating little market excitement.

Market analysts predict that the Federal Reserve's target rate could peak in the coming months before the bank either pauses or adjusts its hawkish stance in response to mounting economic pressures.

Today, traders eagerly anticipate the release of the US Factory Orders report for January, while the focus for the week remains on the upcoming release of US nonfarm payroll data for February and Fed Chief Jerome Powell's testimony scheduled for Tuesday.

EUR/USD Intraday Technical Levels

Support      Resistance

1.0618         1.0633

1.0609         1.0639

1.0603         1.0648

Pivot Point: 1.0624

EUR/USD – Technical Outlook

The EUR/USD pair is currently testing the key resistance level of 1.0650 after returning to positive trading. This development warrants caution in upcoming trades, as the price must remain below this level to maintain the bearish trend scenario for the near future.

The Stochastic indicator is losing its positive momentum, indicating overbought signals that may help push the price downwards toward our primary target of 1.0515. We maintain a bearish outlook, with a breach of 1.0650 halting the negative scenario and potentially leading to additional gains up to the next target of 1.0745.