EUR/USD Price Analysis – June 14, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair has been experiencing a bearish trend and remained well offered around 1.0690 level, hitting the intra-day low of 1.0671 level. However, this downward movement can be attributed to several factors including the bullish US dollar and growing uncertainty surrounding the French elections.
The shared currency has weakened significantly amidst growing uncertainty surrounding the French elections. French President Emmanuel Macron's decision to call for snap elections following a defeat in parliamentary elections has heightened political instability.
The potential success of Marine Le Pen's far-right National Rally party in the French elections is causing concern for the Euro. Markets are worried that if her party gains more influence, it could lead to disruptions in the unity and economic policies of the Eurozone, which in turn negatively impacts the Euro's value.
Euro Under Pressure: French Political Uncertainty and ECB Monetary Policy Impact on EUR/USD Pair
On the EUR front, the shared currency continues to face pressure due to deepening political uncertainty in France ahead of the upcoming legislative elections. President Macron's call for snap elections after facing setbacks has injected volatility into the political landscape, unsettling markets and weakening the Euro.
The potential outcomes of these elections, including the rise of Marine Le Pen's National Rally and the prospects of coalition governments, have exacerbated concerns over political stability within the Eurozone.
Moreover, ECB's monetary policy stance has influenced the Euro's performance against the US Dollar. ECB policymakers have shown caution about the future of inflation, highlighting the difficulties in reaching stable inflation levels.
The potential for additional rate cuts to address low inflation (disinflationary pressures) highlights the Euro's weakness in currency markets.
Fed's Hawkish Outlook and Impact on EUR/USD Pair Amid Soft US Inflation Data
Despite soft inflation data from the US, the Federal Reserve (Fed) has maintained a hawkish stance, which has offset the impact on the EUR/USD pair. Fed Chair Jerome Powell noted positive signs in the May Consumer Price Index (CPI) report, showing cautious optimism about inflation trends.
However, Powell stressed that a consistent improvement in inflation is necessary before the Fed will consider cutting rates further. This aligns with the Fed's current forecast of only one rate cut in 2024, reduced from the earlier expectation of three rate cuts.
Hence, the market's reaction to Fed's policy outlook has been significant, influencing the strength of the US Dollar against the Euro. The US Dollar Index (DXY), which measures the Dollar's value against a basket of major currencies, has remained strong and reached monthly highs.
This strength is due to investors adjusting their expectations based on the Fed's guidance on interest rates and monetary policy.
Therefore, the Fed's hawkish stance has strengthened the US Dollar, causing the EUR/USD pair to decline as investors adjust their expectations based on the Fed's interest rate guidance and policy outlook.
EUR/USD - Technical Analysis
The EUR/USD pair is struggling to maintain upward momentum, currently hovering slightly above the 1.07 mark. On the 4-hour chart, the pair is trading below its pivot point of 1.0726, signaling potential bearish pressure.
The 50-day Exponential Moving Average (EMA) at 1.0814 reinforces this bearish outlook, acting as a significant resistance level.
The Relative Strength Index (RSI) reading of 32 indicates oversold conditions, hinting at a potential bounce in the near term. However, traders should remain cautious as the overall trend remains bearish. Key resistance levels to watch include 1.0766, 1.0798, and 1.0847.
A break above these levels could negate the bearish outlook and signal a potential reversal.
On the downside, immediate support lies at 1.0674, followed by 1.0650 and 1.0613. A break below these levels could exacerbate the downward pressure, potentially leading to further losses for the euro.
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