EUR/USD Price Analysis – May 29, 2023

Daily Price Outlook

EUR/USD, which recently hit multi-week lows just above the key 1.0700 level, has since stabilized and is trading in the low-1.0700s on Monday. This recovery can be attributed to the overall lack of market direction and the Memorial Day holiday in the US, leading to limited trading activity and volatility.

Despite the agreement on the USD debt ceiling, the FX market has shown minimal response thus far. However, European stock markets have opened on a positive note.

Investors remain hopeful that the agreement to raise the US debt ceiling will gain approval from a divided Congress, thereby averting a potential government default. This positive sentiment has provided some support for the euro.

Key factors to monitor for the euro include the price action around the 1.0700 area in EUR/USD and the contrasting approaches of the Federal Reserve (Fed) and the European Central Bank (ECB) regarding their interest rate plans.

Looking ahead, any hawkish statements from the ECB could bolster expectations for further rate hikes, although specific regional economic indicators have shown a loss of momentum.

EUR/USD Price Chart – Source: Tradingview

EUR/USD – Technical Outlook

On the technical side, the EUR/USD currency pair is displaying a somewhat bullish trend following substantial support found around the 1.0706 level. Currently, the Euro has surpassed the 50-day exponential moving average (EMA), which is now acting as additional support at the 1.0717 level.

A potential hurdle is anticipated around the 1.0740 level, marked by a descending trendline visible on the four-hour timeframe.

If the EUR/USD pair successfully breaks above the 1.0740 level, it has the potential to reach the 1.0760 level. However, it should be noted that the pair is currently trading within a narrow range, bounded by 1.0760 on the upside and 1.0706 on the downside. While the pair remains within this range, we can expect a volatile trading session.

Nevertheless, if the Euro falls below the 1.0706 level, there may be an opportunity to short the EUR/USD pair. It is important to closely monitor the 1.0700 level, as a breach below it could present another opportunity to initiate a short position on the EUR/USD pair.