Technical Analysis

EUR/USD Price Analysis – Feb 12, 2024

By LonghornFX Technical Analysis
Feb 12, 20243 min

Daily Price Outlook 

The EUR/USD currency pair continued its downward trend, remaining bearish around the 1.0770 level, despite the weakening US dollar. This downward movement can be attributed to speculation about potential rate cuts by the European Central Bank (ECB), which undermined the euro and put pressure on the EUR/USD pair. Conversely, the general bearish sentiment surrounding the US dollar, fueled by a risk-on attitude in the market, acted as a limiting factor, preventing further losses in the EUR/USD pair.

US Dollar Struggles Amid Fed Uncertainty

The broad-based US dollar is struggling to rise due to uncertainty about the Federal Reserve's plans to cut interest rates. This uncertainty, along with a positive market mood, is undermining the US dollar. However, the bearish US dollar may help the GBP/USD pair to trim its losses. Meanwhile, the market expectations for early rate cuts lowered because the US economy is strong and Fed officials are making hawkish comments. Basically, they want more evidence that inflation is coming down before cutting rates. Additionally, strong US economic data and comments from Fed officials are making investors rethink expectations for rate cuts, which is helping the dollar.

EURUSD Downtrend Driven by Speculation of ECB Rate Cut

On the flip side, the downward movement in the EURUSD pair was further fueled by increasing speculation that the European Central Bank (ECB) might start cutting interest rates at the beginning of the second quarter. Despite efforts by some officials to downplay expectations for immediate policy changes, the market is pricing in the likelihood of a rate cut in the second quarter. This sentiment was reinforced by a drop in German inflation, suggesting a decrease in price pressures. Additionally, ECB member Fabio Panetta hinted at an approaching rate cut, emphasizing the importance of gradual steps to minimize volatility.

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

EUR/USD - Technical Analysis

The EUR/USD pair edged up modestly, trading at 1.07911 with a slight gain of 0.06%. This minor uptick indicates a tentative optimism as the pair hovers around a key pivot point of 1.07688. Should the Euro sustain this momentum, it faces immediate resistance at 1.08131, with further tests at 1.08405 and 1.08874.

On the downside, immediate support lies at 1.07389. A break below could see the currency pair seeking further support at 1.06946 and 1.06685. The Relative Strength Index (RSI) stands at a neutral 54, suggesting a balanced force between buyers and sellers.

The Moving Average Convergence Divergence (MACD) presents a marginal bullish signal, with a value of 0.00043 over the signal line's 0.00017, hinting at potential upward momentum. The 50-day Exponential Moving Average (EMA) is currently at 1.07831, reinforcing the pivot point as a significant short-term level.

The technical landscape for EUR/USD shows cautious bullishness, prompting a strategy to buy above 1.07858, aiming for a take profit at 1.08270, and setting a stop loss at 1.07541 to manage risk.

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