Technical Analysis

EUR/USD Price Analysis – April 05, 2024

By LonghornFX Technical Analysis
Apr 5, 20243 min

Daily Price Outlook

The EUR/USD currency pair has been experiencing a bearish performance recently, with the euro losing ground against the US dollar. However, the several factors have contributed to this downward trend including the geopolitical tensions in the Middle East, which have led to increased uncertainty in the market. This has bolstered the US dollar, as higher inflation often leads to expectations of tighter monetary policy.

Furthermore, the cautious stance of the Federal Reserve, coupled with weaker German economic data and geopolitical tensions, has contributed to the bearish performance of the EUR/USD currency pair. Traders will continue to monitor economic data and central bank policies for further insights into the direction of the currency pair.

Weak German Data and Its Impact on EUR/USD

Apart from this, the downbeat economic data from Germany has also weighed heavily on the EUR/USD currency pair. German industrial orders and factory data have both disappointed economists' expectations, indicating a slowdown in the German manufacturing sector. Meanwhile, Industrial orders tumbled at an annual rate of 10.6% in February, while factory orders only rose by 0.2% over the same period, missing estimates.

Therefore, the sluggish performance of the German economy has raised concerns about the broader Eurozone economy, as Germany is its largest economy. Investors are worried that weaker economic growth in Germany could drag down the entire Eurozone, putting pressure on the shared currency. As a result, the EUR/USD currency pair has faced selling pressure, contributing to its bearish trend.

Cautious Fed Stance and US Initial Jobless Claims: Impact on EUR/USD

On the US front, the cautious stance of the Federal Reserve, coupled with weaker-than-expected US economic data, has also influenced the EUR/USD currency pair. Despite initial speculation about potential interest rate cuts, recent comments from Fed officials have tempered expectations. Some policymakers have indicated that if inflation remains stable, there may be no need for rate cuts in 2024.

Additionally, US initial jobless claims increased to 221,000, slightly higher than expected. This uncertainty has supported the US dollar, as investors seek safe-haven assets amid economic uncertainties.

EUR/USD Price Chart - Source: Tradingview
EUR/USD Price Chart - Source: Tradingview

EUR/USD - Technical Analysis

The EUR/USD pair saw a slight decrease of 0.10%, settling at 1.08257. Currently, the currency pair hovers around the pivot point of 1.0809, indicating a delicate balance in market sentiment. Immediate resistance is found at 1.0850, with further hurdles at 1.0905 and 1.0945. Should the Euro strengthen, these are the levels to watch for potential breakouts. On the downside, support is established at 1.0753, with additional safety nets at 1.0712 and 1.0657, which could come into play if the pair weakens.

The Relative Strength Index (RSI) at 54 suggests a relatively neutral market momentum, neither overly bought nor sold. The 50-day Exponential Moving Average (EMA) at 1.0833 is in close proximity to the current price, further signaling a market in equilibrium.

Given these observations, the EUR/USD pair is at a crossroads. The advised trading strategy involves buying above 1.08232, with a target of 1.08686 and a stop loss at 1.07938.

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