EUR/USD Price Analysis – Jan 24, 2024
Daily Price Outlook
Despite the downbeat EU Consumer Confidence and a bullish US dollar, the EUR/USD currency pair maintained its upward trend and remained well-bid around the 1.0880 level. However, market traders are awaiting the IFO Purchasing Managers Index (PMI) data from the Eurozone and Germany on Wednesday. This cautious sentiment makes investors hesitant to take any strong position in the EUR/USD pair. Moreover, the Euro (EUR) faced downward pressure after the European Commission released preliminary Consumer Confidence data on Tuesday, signaling a decline in consumer trust in economic activity.
Meanwhile, the bullish US dollar, backed by the risk-off market sentiment and decreased probability of a rate cut by the Federal Reserve, was seen as one of the key factors that kept the lid on any additional gains in the EUR/USD pair.
Consumer Confidence Drop and ECB's Stability Outlook
As we mentioned above, the shared currency faced downward pressure after the European Commission released the preliminary Consumer Confidence data on Tuesday. Notably, the index dropped to -16.1 in January, below the expected -14.3 and the previous -15.0.
Looking ahead, market investors are keeping an eye on the IFO Purchasing Managers Index (PMI) data from the Eurozone and Germany on Wednesday. Meanwhile, the interest rate decision and a monetary policy statement from the European Central Bank (ECB) will also be in spotlight. It should be noted that the ECB has indicated a stable interest rate outlook until summer unless there are major changes in economic indicators.
Therefore, the EUR/USD pair managed to regain its strength even as downward pressure persisted with Consumer Confidence dropping more than expected. Investors remain cautious, awaiting PMI data and the ECB's policy statement. The outlook hinges on economic indicators.
Recent Developments Impacting EUR/USD Pair and Market Anticipation
Furthermore, the broad-based US dollar remains stable after a recent rise, driven by increased buying interest amid global uncertainties, particularly in the Middle East. However, the strength of the US Dollar could face some challenges amid declining short-term Treasury yields, which may act as a positive factor for the EUR/USD pair. Notably, the 2-year US yield is down to 4.33%, reflecting a 0.87% decrease.
Market sentiment suggests a lower chance of a March rate cut by the Federal Reserve, but there's already a fully priced-in 25 basis point cut, and a 50 bps cut has a 50% chance in May. Traders are eagerly anticipating Wednesday's release of the S&P Global Purchasing Managers Index (PMI) data from the United States.
EUR/USD - Technical Analysis
As of January 24, the EUR/USD pair has witnessed a slight uptick, registering a 0.06% increase to 1.08596. This subtle rise comes amidst a critical juncture in the currency market, with traders closely monitoring a network of key price levels and indicators.
The pair's immediate pivot point stands at 1.0842, acting as a crucial determinant in the near-term price direction. If the pair maintains above this level, it faces consecutive resistance levels at 1.0906, 1.0961, and a significant barrier at 1.1030. These points could hinder upward progress. Conversely, if the pair retreats, it will encounter support at 1.0782, followed by 1.0717 and 1.0648, levels that could potentially stem further declines.
Technical indicators paint a nuanced picture; the Relative Strength Index (RSI) at 42 suggests a neutral to slightly bearish sentiment. The MACD shows a minor negative divergence (-0.00029), indicating potential bearish momentum, but this signal remains to be confirmed by market movements. The 50-Day EMA at 1.08677 is slightly above the current price, adding another layer to the technical analysis.
In conclusion, the current technical outlook for EUR/USD leans towards a cautious approach. A potential strategy could be to initiate short positions below 1.08903, aiming for a take-profit level at 1.08199, with a stop-loss set at 1.09300.
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