Technical Analysis

EUR/USD Price Analysis – April 17, 2024

By LonghornFX Technical Analysis
Apr 17, 20243 min

Daily Price Outlook

The EUR/USD pair has continued its downward rally, experiencing a bearish trend around 1.0620 on Wednesday. This decline can be attributed to various factors, including a hawkish Fed, safe-haven flows toward the US dollar, and expectations of ECB rate cuts. These influences are expected to persist, with market participants closely monitoring central bank policies and economic indicators for further insights.

Hawkish Comments from Fed Officials and Safe-Haven Flows:

On the US front, the hawkish tone from Fed officials, including Powell, has contributed to safe-haven flows into the USD. Powell's positive remarks about the job market and his concerns about inflation have made investors prefer the USD as a safe-haven asset. Additionally, recent US economic data, such as the decrease in Housing Starts and Building Permits, has further boosted the USD's appeal, exerting additional downward pressure on the EUR/USD pair.

On the data front, US Building Permits fell to 1.458 million in March, below the expected 1.514 million, while Housing Starts dropped to 1.321 million, missing the anticipated 1.480 million. However, US Retail Sales increased by 0.7% in March, exceeding expectations of 0.3% and revised upwards from 0.6% in February. These factors, along with Jerome Powell's hawkish comments, contributed to downward pressure on the EUR/USD pair.

ECB's Plans to Cut Rates and Impact on EUR/USD:

On the Euro front, speculation about the ECB lowering interest rates in June could negatively impact the EUR/USD pair. This anticipation could lead to a weakening of the euro against the dollar as investors adjust their positions in response to the rate cut. Lagarde's comments signaling a rate cut and concerns over the Eurozone's economic outlook and inflationary pressures contribute to a bearish sentiment for the euro. Besides this, monitoring oil prices due to Middle East tensions adds to the uncertainty, adding downward pressure on the euro.

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

EUR/USD - Technical Analysis

On April 17, the EUR/USD pair traded slightly lower, closing at 1.06113, a 0.06% decrease from the previous session. This minor pullback reflects a cautious market sentiment as traders evaluate the latest economic cues from both Europe and the United States. The pair currently sits below its pivot point of 1.0630, suggesting a bearish bias in the near term. Immediate resistance is observed at 1.0685, with additional barriers at 1.0726 and 1.0787. Should the pair break above these levels, it could signal a shift towards a bullish outlook.

Conversely, support for the EUR/USD is found at 1.0600, followed by 1.0571 and 1.0528. Breaking below these levels could accelerate the bearish trend, pushing the pair to lower valuations. The Relative Strength Index (RSI) at 29 indicates that the pair is currently in the oversold territory, which might trigger a corrective rebound if bullish triggers emerge in the market.

The 50-day Exponential Moving Average (EMA) at 1.0741 further illustrates that the pair is trading below medium-term moving averages, supporting the current bearish perspective. Considering these factors, traders might consider a short position at a break below 1.0630, with a take profit target at 1.0571 and a stop loss at 1.0671 to manage risk effectively.

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