EUR/USD Price Analysis – Jan 29, 2024
Daily Price Outlook
During the European trading hours on Monday, the EUR/USD currency pair continued its downward trend and remained well offered around the $1.0846 level. However, the reason for this decline can be attributed to the renewed strength of the US Dollar, which was supported by rising geopolitical tensions in the Middle East. In the meantime, Investors are expected to closely monitor the Federal Open Market Committee (FOMC) meeting scheduled for Wednesday. On the other side, European Central Bank (ECB) decided to keep key interest rates steady, which may contribute to a stable or slightly positive impact on the EUR/USD pair.
European Central Bank's Monetary Policy Challenges for EUR/USD
As we mentioned above that the European Central Bank (ECB) recently decided to keep key interest rates unchanged because of lower inflation in December. ECB President Christine Lagarde is worried about stagflation in the Eurozone in the last quarter of 2023 and the possibility of an economic slowdown. Lagarde stressed that the ECB will make decisions based on data at each meeting.
Moreover, ECB council member Klaas Knot mentioned the need for evidence of slowing wage growth before considering interest rate cuts. However, many people in the market expect interest rates to be cut, which could affect the Euro and create a challenge for the EUR/USD pair.
Therefore, the ECB's decision to maintain interest rates, coupled with concerns about stagflation and the cautious stance on rate cuts, might pose challenges for the EUR/USD pair, influencing it negatively amid market expectations.
Potential Impact of FOMC Decisions and Germany's GDP on EUR/USD Pair
Furthermore, the Federal Open Market Committee (FOMC) kept the interest rate steady in December 2024, and predictions suggest it will remain between 5.25% and 5.50% in the January meeting. Traders initially thought there was an 88% chance of a rate cut in March, but that dropped to 48.2%.
On Tuesday, Germany's Gross Domestic Product (GDP) is expected to decrease by 0.3% for Q4. The FOMC meeting this week may not change rates, but what Chairman Jerome Powell says in the press conference could affect the USD. If Powell sounds less optimistic, the USD might weaken against other currencies, which traders will be watching.
Therefore, the FOMC's maintained interest rate and the possibility of a cut in March, coupled with Germany's expected GDP contraction, could impact the EUR/USD pair. Powell's dovish comments may weaken the USD against other currencies, drawing traders' attention.
EUR/USD - Technical Analysis
The Euro against the US Dollar (EUR/USD) is exhibiting a nuanced trading pattern as of January 29. The pair is trading at 1.08454, reflecting a slight decrease of 0.10%. The technical landscape on the 4-hour chart reveals critical levels that could guide the pair’s short-term trajectory.
The pivot point is established at 1.0805, serving as a barometer for the pair's immediate trend. Above this level, resistance is seen at 1.0865, 1.0920, and 1.0985, each posing potential hurdles for upward price movement. Conversely, support levels are identified at 1.0749, 1.0682, and 1.0620, which could offer a buffer against any downward pressure.
The Relative Strength Index (RSI) stands at 43, indicating a slight bearish momentum without veering into oversold territory. The Moving Average Convergence Divergence (MACD) is currently at -0.00013 with its signal line at -0.00098, suggesting the beginning of a potential upward trend as the MACD line is crossing above the signal line. The 50-day Exponential Moving Average (EMA) closely mirrors the current price at 1.0846, providing a near-term reference for trend assessment.
In conclusion, the EUR/USD pair currently presents a predominantly neutral trend with a slight inclination towards bearishness. Traders considering a position might look at a sell limit at 1.08560, with a take-profit target set at 1.07886, and a stop loss at 1.08867. This setup reflects the pair's stability, yet cautions against potential downward shifts.
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