EUR/USD Price Analysis – Feb 28, 2024

Daily Price Outlook

Despite recent comments by European Central Bank (ECB) President Christine Lagarde, the EUR/USD currency pair has been unable to halt its downward streak and continues to hover around the 1.0820 level. However, the renewed strength of the US dollar has played a major role in pushing the EUR/USD lower. On the flip side, Christine Lagarde recently stated that while inflation is nearing the central bank's targets, they intend to maintain current policy measures unchanged. This indicates a steady economic environment, reducing uncertainty for investors. This stability can boost confidence in the Euro, leading to increased demand and strengthening its value.

Investors will closely watch the Euro Zone Economic Sentiment Indicator for February and the preliminary Gross Domestic Product Annualized (Q4) from the United States, scheduled to be released later in the day.

US Dollar Strength Amid Risk-off Sentiment and Fed's Hawkish Remarks

Despite previously released downbeat US economic data, the broad-based US dollar gained momentum and remained well-bid thanks to the risk-off market sentiment, which strengthened safe-haven assets like the US dollar. Furthermore, hawkish remarks by the Federal Reserve about interest rate decisions played a major role in bolstering the US dollar. It should be noted that the probability of rate cuts in March has diminished to 1.0%, while the possibility of cuts in May and June stands at 21% and 49.8%, respectively. This supported the US dollar and contributed to losses in the EUR/USD pair.

European Central Bank's Policy and German Economic Data

Despite inflation steadily approaching the European Central Bank's targets, recent comments by ECB President Christine Lagarde suggest that the bank intends to maintain its current policy measures unchanged for the future. This provided mild support to the EUR currency and was seen as a key factor that may help the EUR/USD pair limit its losses.

On the data front, the Gfk German Consumer Confidence Survey for March matched expectations with a reading of -29, compared to the previous -29.6 in February. The focus will now turn to Germany's Retail Sales and Consumer Price Index (CPI) inflation data later in the week to gain more insights into the economic situation. Hence, the Gfk German Consumer Confidence Survey meeting expectations may support the EUR, but focusing on upcoming data is crucial for further impacts.

EUR/USD - Technical Analysis

In the latest trading session, the EUR/USD pair witnessed a modest decline, marking a 0.15% decrease to trade at 1.08333. This movement suggests a cautious sentiment among traders as they navigate through fluctuating market dynamics. The pivot point for the day is set at 1.0859, indicating that movements below this level could signal further bearish momentum for the currency pair.

Key resistance levels are identified at 1.0895, 1.0932, and 1.0966, which could serve as potential hurdles for any upward movement. Conversely, immediate support is found at 1.0798, followed by 1.0763 and 1.0731, offering crucial buffers against further declines.

The Relative Strength Index (RSI) stands at a neutral 50, suggesting a balance between buying and selling pressures. However, the breach of the upward channel on the downside indicates potential for increased selling activity, underscoring the importance of monitoring these technical thresholds closely.

Given the current technical landscape, a bearish outlook is recommended for traders, with a suggested entry point for selling below 1.08340. Setting a take profit at 1.07980 and a stop loss at 1.08627 could optimize trading strategies in the face of emerging market trends.