Technical Analysis

EUR/USD Price Analysis – June 18, 2024

By LonghornFX Technical Analysis
Jun 18, 20243 min

Daily Price Outlook

EUR/USD is presently trading at $1.07198, with market sentiment leaning towards optimism for potential rate cuts as the new trading week begins. Despite Federal Reserve (Fed) officials' cautionary statements hinting that rate cuts might not proceed as quickly as investors hope, the focus remains on the upcoming U.S. economic data for clearer directional cues.

U.S. Retail Sales to Shape Market Sentiment

Attention is set on Tuesday's U.S. Retail Sales report, where an increase of 0.3% month-over-month in May is expected, following a flat performance in April. This data point is particularly significant as it may influence Fed policy decisions moving forward. Core Retail Sales, excluding automobiles, are also projected to show a consistent rise of 0.2%.

Fed Officials Voice Cautious Outlook

Throughout the week, several Fed officials are slated to speak, with their insights eagerly anticipated by the markets. Recent inflation data suggests a quicker-than-expected easing, yet the Fed has expressed hesitation about hastening rate adjustments.

The necessity for more comprehensive data before altering monetary policy has been emphasized, reflecting a cautious approach towards economic recovery.

Economic Indicators and Federal Reserve Speeches

As traders await the U.S. retail sales figures and monitor speeches from various Fed officials, the Dollar Index shows modest gains, trading up by 0.2% at 105.125. However, it remains below the recent 1 1/2-month high of 105.80.

This week's economic calendar also includes the release of U.S. Industrial Production and Capacity Utilization Rate, expected to provide further insights into the economic landscape and potential shifts in Fed policy.

Key Economic Releases:

    This week is pivotal for the EUR/USD pair as it navigates through critical economic releases and central bank communications. These events are likely to dictate short-term market dynamics and potentially set the tone for the currency pair's movements in the upcoming sessions.

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

    EUR/USD - Technical Analysis

    EUR/USD is currently trading at $1.07198. The pivot point at $1.07255 is crucial for determining the next move. Immediate resistance is found at $1.07387, with subsequent resistance levels at $1.07577 and $1.07734. These levels need to be breached for a potential bullish reversal. On the downside, immediate support is identified at $1.07000. If this level is broken, the next support levels are at $1.06738 and $1.06499.

    The 50-day Exponential Moving Average (EMA) is currently at $1.07734, while the 200-day EMA is at $1.07706, indicating bearish momentum in the short term. The Relative Strength Index (RSI) is at 42.30, suggesting that the market is neither overbought nor oversold, but closer to the lower end of the spectrum. This implies a potential for further downside if bearish pressure continues.

    The current price action indicates that a break above the immediate resistance at $1.07387 could signal a bullish move, while a drop below the pivot point of $1.07255 may lead to further downside pressure.

    Considering the current technical outlook, a sell position below $1.07255 is advisable with a take profit target at $1.06738 and a stop loss at $1.07577.

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