EUR/USD Price Analysis – March 30, 2023
Daily Price Outlook
The EUR/USD is trading at 1.0830, down by 0.12% in 24 hours. The currency pair declines while traders wait for US and German inflation statistics.
Eyes on Fed's Preferred Measure of Inflation
On the American front, the better-than-expected report revealed that the housing market was still recovering. The Pending House Sales data, released on Wednesday, attracted the interest of traders since it showed that, in February, Pending Home Sales climbed by 0.8% month over month, as opposed to the analyst consensus of -2.3%.
Unexpectedly, US pending home sales increased for a third consecutive month in February, indicating that the housing market may rebound after a challenging year. As a result, it helped the Dollar Index (DXY), which is currently up 0.11% at 102.75. The EUR/USD currency pair came under pressure as the dollar strengthened.
Furthermore, in light of the Fed's policy decision from last week, the market will be closely monitoring the release of inflation statistics to see if the Fed will continue raising rates or whether it will take a break. The Core PCE price index, which is coming Friday, is the Fed's favored gauge of inflation. Therefore, the market won't take any unexpected findings lightly.
ECB to Hike Rates
The European Central Bank (ECB) increased interest rates by 50 basis points a few weeks ago. However, despite recent signals from several policymakers at the central bank, it made no reassurance on future rates. The ECB is closely monitoring the banks in the Eurozone for signs of financial instability, but it has not changed its commitment to combating inflation.
Meanwhile, as the bank turmoil has eased, ECB policymakers have stressed the necessity for higher interest rates. According to Philip Lane, the ECB's chief economist, more rate rises will be required under the base-case scenario to ensure that inflation falls below 2%.
On Wednesday, the German GfK Consumer Confidence survey was released, revealing that, in contrast to the expert estimate of -29.2, Consumer Confidence increased from -30.6 to -29.5. The report showed that German consumers were still under pressure and fell short of analyst expectations. Nevertheless, given that the ECB is still committed to fighting inflation, the data should not significantly influence its decision-making.
Furthermore, it is essential to keep an eye on the German CPI since it will provide a clear indication of what to expect for the Eurozone CPI, which is coming on Friday, as well as the ECB's next move. Markets anticipate a 25 basis point rate increase at the upcoming meeting on May 4. The expectation of more rate increases by the ECB supports the steady EUR/USD exchange rate.
EUR/USD Intraday Technical Levels
Support Resistance
1.0817 1.0870
1.0791 1.0897
1.0763 1.0924
Pivot Point: 1.0844
EUR/USD – Technical Outlook
The EUR/USD pair has been experiencing limited fluctuations since yesterday, hovering around the 1.0840 level. It's worth noting that the stochastic indicator has shed its negative momentum and is now approaching oversold territory, while the EMA50 continues to offer positive support to the price.
As a result, the prospects for a resumption of the anticipated bullish trend in the near term remain strong, with the next primary target situated at 1.1032. It's important to keep in mind that maintaining a level above 1.0745 is crucial to achieve the suggested targets, and surpassing 1.0870 would facilitate the move towards the anticipated target.
For today, the projected trading range is between 1.0770 as support and 1.0935 as resistance.
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