Daily Price Outlook
The major currency pair EUR/USD is up by +0.30% at 1.1046 level. The prices are recovering previous day’s losses on the back of improved market sentiment and weak US dollar.
On Thursday, the European Central Bank (ECB) raised its interest rates by 25 basis points and left the door open for further rate hikes. The stubborn clinging inflation in Eurozone was the major reason behind this decision from ECB.
The bank also decided that future inflation outlook will continue to drive the upcoming policy rate decisions. Central bank is worried that inflation has remained too high for a longer period of time than it has expected.
Furthermore, regarding the APP front, the European Central Bank has decided to increase the pace of APP reinvestment termination from July 2023.
The bottom line is that the European Central Bank has clarified that future rate hikes are possible, which has kept the euro stable against the US dollar and pushed the EUR/USD pair higher on Friday. Market participants are expecting at least two more rate hikes of 25 basis points in the next meetings, adding to the risk sentiment.
On the US front, the US dollar was under pressure ahead of the release of Non-Farm Payrolls data, which is expected to be 181K for the month of April.
Additionally, the Unemployment Rate is also scheduled for release today. The US dollar index (DXY) is down by 0.22% at 101.17 as the Federal Reserve has shut the door for future rate hikes and fears of a US banking crisis.
The market believes that a third major bank failure is on the horizon, with PacWest Bancorp stocks falling by 47% on Thursday. The stocks of this bank have fallen by about 90% since the beginning of March, raising concerns and adding pressure on the US dollar.
Daily Technical Levels
Pivot Point: 2054
EUR/USD – Technical Outlook
The EUR/USD pair tested the Exponential Moving Average 50 (EMA50), which formed good support at 1.1010 and maintained stability above it. It has started today with a positive trend and attempts to resume the main bullish trend. The Stochastic oscillator is providing clear positive signals at the moment, which could motivate the price to provide more positive trades in the upcoming sessions. The breach of 1.1075 will confirm a rally towards the next target of 1.1150.
Therefore, we will continue to suggest a bullish trend on an intraday and short-term basis. Breaking 1.1010 will stop the positive scenario and put the price under additional negative pressure, leading to a potential drop towards the 1.0945 level before any new attempt to rise.
The expected trading range for today is between the support level of 1.0970 and the resistance level of 1.1120.
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