Technical Analysis

EUR/USD Price Analysis – Feb 09, 2024

By LonghornFX Technical Analysis
Feb 9, 20243 min

Daily Price Outlook 

The EUR/USD currency pair continued its downward trend and remained well offered around the 1.0768 level. However, the declines could be associated with bets that the ECB will start cutting rates in April, which undermined the EUR currency and contributed to the EUR/USD pair's losses. Furthermore, the broad-based US dollar renewed strength, supported by positive economic data as well as a hawkish Fed stance, was seen as another key factor that kept the EUR/USD pair lower.

Fed's Stance and US Bond Yields Impact EUR/USD Dynamics

Traders seems cautious to place any strong position because they are waiting for more clarity from the Federal Reserve regarding interest rates. Some key members of the Federal Open Market Committee (FOMC) are saying no to lowering rates quickly in 2024 because they think the economy is doing well. As a result, US bond yields remain high and boosted the US dollar. Moving ahead, traders eyes are on upcoming US consumer inflation data to see what it reveals about future Fed actions, which will influence short-term USD movements and EUR/USD trends.

Therefore, this hawkish tone may strengthen the US dollar against the euro, as it suggests a delay in rate cuts and boosts bond yields, potentially leading to a stronger USD.

ECB's Cautious Stance Supports Euro amid Rate Cut Expectations

On the other hand, People are betting that the European Central Bank (ECB) will start lowering interest rates in April, which could limit the gains for the euro. Despite this, European Central Bank officials are working to ease expectations of early interest rate cuts, which is supporting the EUR/USD pair to limit its losses.

It should be noted that Governing Council member Pierre Wunsch says we should wait for wage data before cutting rates to hit the inflation target. ECB board member Isabel Schnabel also says we need to be patient, as inflation might rise again. The ECB won't change rates before June, despite a possible economic downturn. Traders are unsure about betting on the euro's rise due to expectations of a rate cut later.

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

EUR/USD - Technical Analysis

The EUR/USD pair is navigating cautious waters, having edged down a slight 0.07%, currently trading at $1.07721. The minor retreat suggests an ongoing indecision among traders as the pair hovers near the pivot point of $1.07510, which could set the tone for subsequent movements.

Looking at key price levels, there’s immediate resistance at $1.08210, with further ceilings at $1.08613 and $1.09420 that may stifle any bullish impulses. On the support side, $1.07080 stands as the first buffer against bearish pressure, followed by $1.06272 and $1.05546, critical levels where buyers may potentially re-emerge.

Technical indicators offer a nuanced perspective: the RSI is neutral at 48, and the MACD shows a positive value of 0.00037, albeit the signal stands at -0.00048, hinting at a possible shift in momentum.

The 50-day EMA at $1.07711 is particularly noteworthy, acting as a dynamic resistance level. A bearish flag formation on the chart suggests a potential continuation of the downtrend, warranting attention for those eyeing entry points.

In conclusion, the current technical landscape points towards a potential sell below $1.07837, with a prudent take-profit level at $1.07428 and a stop loss at $1.08074 to manage risks effectively.

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