Technical Analysis

EUR/USD Price Analysis – Dec 15, 2023

By LonghornFX Technical Analysis
Dec 15, 20234 min

Daily Price Outlook

During the early European session on Friday, the EUR/USD currency pair maintained its upward trend, gaining additional momentum near the 1.1000 mark. However, the reason for this upward rally can be attributed to the fact that the European Central Bank (ECB) kept interest rates unchanged on Thursday. In response to the ECB's decision, the Euro (EUR) attracted buyers, lifting the EUR/USD currency pair.

Meanwhile, the Greenback experienced downward pressure following dovish remarks from Federal Reserve Chairman Jerome Powell, along with projections from Fed officials indicating three anticipated rate cuts in the coming year. This was seen as another crucial factor contributing to the upward momentum of the EUR/USD pair.

ECB Maintains Steady Interest Rates, Providing Stability to EUR/USD Pair Amid Economic Uncertainties

It's worth noting that the European Central Bank (ECB) chose to keep interest rates steady, as many predicted. This includes the main refinancing operations at 4.50%, the marginal lending facility at 4.75%, and the deposit facility at 4.00%, in line with expectations.

Despite expectations for rate cuts due to lower inflation and price pressure, the central bank is standing firm on maintaining record-high borrowing costs. This move by the central bank is aimed at maintaining stability in the face of economic uncertainties.

Therefore, the ECB's decision to keep key interest rates unchanged, contrary to expectations of cuts, has stabilized the EUR/USD pair. The Euro gained support, reflecting the central bank's commitment to maintaining record-high borrowing costs despite economic uncertainties.

US Federal Reserve's Dovish Stance and Economic Data Impact: EUR/USD Pair Gains Momentum

Moreover, the US Federal Reserve chose to keep its benchmark fed funds rate range unchanged at 5.25%–5.50% on Wednesday. Despite this, the Greenback faced downward pressure after Federal Reserve Chairman Jerome Powell made dovish remarks, and Fed officials projected three rate cuts in the coming year.

On Thursday, US Retail Sales exceeded market expectations, growing 0.3% in November, rebounding from a 0.2% decline in the previous reading. Initial Jobless Claims for the week ending December 9 were 202,000, beating the market consensus of 220,000.

However, the positive US data failed to boost the Greenback. Investors, still processing the Fed's monetary policy meeting outcome and the anticipation of future rate cuts, kept the currency under pressure across the board.

Therefore, the EUR/USD pair experienced upward momentum as the US Federal Reserve's dovish tone and projections of future rate cuts weakened the Greenback, despite positive US economic data failing to provide support.

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

EUR/USD - Technical Analysis

In the ever-evolving forex market, the EUR/USD pair on December 15 presents a scenario of cautious optimism. Trading at 1.09980, the pair sees a modest increase of 0.07%, reflecting a tempered bullish sentiment. The pair’s technical posture is anchored around a pivot point of $1.0866, with its trajectory shaped by a series of key price levels.

Immediate resistance is encountered at $1.0962, followed by higher ceilings at $1.1035 and $1.1104. On the downside, supports are formed at $1.0797, $1.0693, and $1.0624, crucial for maintaining the pair's stability. The Relative Strength Index (RSI) at 77 signals an overbought condition, suggesting the pair might be approaching a potential reversal point. The MACD, with a value of 0.00198 below its signal line of 0.01, indicates a weakening of the current bullish trend.

The pair's positioning above the 50-Day Exponential Moving Average (EMA) of $1.0943 further underlines its short-term bullish trend. However, a double-top pattern near the $1.1008 mark poses a significant resistance, potentially limiting further gains. A successful breach of this level could indicate a stronger bullish momentum, while failure to do so may result in a pullback.

Overall, the EUR/USD pair exhibits a bullish trend, contingent upon a breakout above the $1.1000 mark. The short-term forecast anticipates a testing of these resistance levels, with market participants closely watching for a possible upward trajectory or a shift in trend.

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