EUR/USD Price Analysis – April 20, 2023
Daily Price Outlook
The EUR/USD is trading at 1.0968, up by 0.13% in 24 hours. The major currency pair gained value in response to positive inflation figures for the eurozone, with German producer prices declining in March but remaining positive annually.
US Dollar Faces Pressure
John Williams, president of the Federal Reserve Bank of New York, stated on Wednesday that the US central bank will take action to reduce inflation since it is still at troubling levels.
The market now expects that the Fed will deliver a last 25bp rate rise in May, after which the discussion will shift to whether rates will remain unchanged for the remainder of the year.
Investor caution continued as the US Dollar Index (DXY) fell 0.09% to 101.88 ahead of the Fed's anticipated 25bp rate rise next month. Meanwhile, benchmark 10-year bond rates decreased to 3.555%. As a result of pressure on the US Dollar, the EUR/USD rose.
When looking ahead to the US session, it is a busy day on the US economic calendar. The April Philly Fed Manufacturing Index readings and the crucial US unemployment claims reports will be the primary drivers.
Eurozone Inflation and Its Impact on EUR/USD
The European Central Bank (ECB) feels uncertain about the price pressures. Although the headline inflation rate in the eurozone has dropped from 8.5% to 6.9%, the underlying readings have remained high.
Policymakers at the ECB worry that rising energy prices are permeating the economy and making it harder to control inflation. However, as the worries about the banking sector have diminished, prospects of more interest rate hikes by the ECB have grown.
Additionally, recent ECB rhetoric has been hawkish; Joachim Nagel, the head of the German central bank, stated that the ECB must hike rates because of the risk of rapid price growth being entrenched. Francois Villeroy de Galhau, the head of the French central bank, stated that future meetings might result in rate increases.
The EUR/USD pair gained value following strong inflation reports in the eurozone and hawkish ECB officials. Eurozone economic data will spark interest ahead of the ECB minutes, and Eurozone consumer sentiment will move the dial later in the day.
Daily Technical Levels:
Support Resistance
1.0920 1.0987
1.0884 1.1020
1.0852 1.1055
Pivot Point: 1.0952
EUR/USD – Technical Outlook
The EUR/USD pair experienced a swift rebound following the negative pressure encountered in previous sessions, settling above the 1.0945 level once more. This has resulted in mixed trading and conflicting technical factors, leading to a preference for remaining on the sidelines until a clearer signal for the next trend emerges.
The market now awaits either a break of the 1.0945 support or a breach of the 1.0980 resistance to more accurately determine future targets. It is important to note that breaking the mentioned support and maintaining a position below it will exert further pressure on the price, leading to an additional bearish correction with a subsequent target of 1.0860.
Conversely, breaching the resistance is key to resuming the primary bullish trend and pursuing gains that begin with testing the 1.1075 area.
Related:
* USD/CAD Price Analysis – April 20, 2023
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