EUR/USD Price Analysis – May 08, 2023
Daily Price Outlook
EUR/USD bulls maintain control around 1.1040 as the pair sustains its intraday high and gains 0.15% ahead of Monday's European session. The latest gains in the euro pair can be attributed to hawkish comments from European Central Bank (ECB) officials and the general weakness of the US dollar amid mixed sentiment.
Klaas Knot, president of the Dutch Central Bank and a member of the ECB board, said over the weekend that "ECB interest rate hikes are starting to take effect, but more will be needed to tame inflation." Francois Villeroy de Galhau, president of the Bank of France and a member of the ECB Governing Council, also hinted at further rate increases.
It's worth noting that the US Dollar Index (DXY) has dropped 0.13% to 101.15, indicating another attempt to break a three-week-old ascending support line. Despite the positive headline figures, the downward revision of the US nonfarm payrolls (NFP) data could be the reason for the dollar's recent decline, which supports St. Louis Federal Reserve President James Bullard's bullish view.
Moreover, there are expectations that US policymakers will address lingering default concerns ahead of US President Joe Biden's meeting with Republican House Speaker Kevin McCarthy, Republican Senate Minority Leader Mitch McConnell, and top congressional Democrats on Tuesday to discuss the debt ceiling issue.
According to Reuters, US Treasury Secretary Janet Yellen issued a stark warning on Sunday that a failure by Congress to act on the debt ceiling could lead to a "constitutional crisis" and also cast doubt on the federal government's creditworthiness.
On the other hand, a significant move above the April 26 high of 1.1095 would propel the pair towards a new 13-month high of 1.1185, followed by round-figure resistance at 1.1200.
EUR/USD – Technical Outlook
On Monday, the EUR/USD pair is trading around the 1.1040 level, exhibiting a bullish bias. On the two-hourly timeframe, we can see that the EUR/USD has found immediate support around the 1.1016 level.
Moreover, the currency pair has formed a Tweezer Bottom pattern, or alternatively, a bullish engulfing pattern, which can be observed on the two-hourly timeframe near the 1.1016 level. Currently, the formation of three white soldiers' candlesticks indicates that the bullish bias is dominating the market. With that in mind, the EUR/USD has the potential to target the next resistance level at 1.1060, and a bullish cross above this level could lead the price toward 1.1090.
The EUR/USD has already surpassed the 50-day exponential moving average around the 1.1030 level and is now acting as support. Meanwhile, the RSI and MACD, two leading technical indicators, also hold in a buying zone. Consequently, today's pivot point will likely be around the 1.1015 level. The suggested strategy is to look for a buy position above 1.1025 today.
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