EUR/USD Price Analysis – June 26, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has been experiencing significant bearish pressure recently, falling below the 1.0685 level. This decline shows growing concerns over the Euro's near-term outlook amidst uncertainties surrounding European Union legislative elections and potential policy shifts within the European Central Bank (ECB).
It should be noted that the recent snap election announcement in France, following defeats for President Emmanuel Macron's party, has heightened market concerns about political instability in the Eurozone.
Economic indicators from Germany, the largest economy in the Eurozone, also reflect a troubling trend, with the IFO Expectations index unexpectedly falling. This suggests weaker economic prospects and has reduced investor confidence in the Euro.
Fed Maintains Hawkish Guidance on Interest Rates and Bullish US Dollar: Impact on EUR/USD Pair
On the US front, the Federal Reserve's commitment to maintaining its current interest rate framework has bolstered the US Dollar against its major counterparts, including the Euro.
Fed policymakers, led by recent comments from Governor Michelle Bowman, have signaled a reluctance to consider rate cuts in the near term, citing the need for sustained declines in inflationary pressures before any policy easing measures are entertained.
This hawkish stance contrasts sharply with market expectations, where investors had priced in potential rate cuts amid softer inflation data from the United States.
The prospect of a prolonged period of higher interest rates in the US has attracted capital flows into the Dollar, heightening its appeal as a safe-haven currency and exerting downward pressure on the EUR/USD pair.
Fears Over Eurozone Elections Intensify, ECB Rate Cut Expectations Grow: Impact on EUR/USD Pair
On the other hand, the Eurozone faces heightened political uncertainty following President Macron's call for a snap election in France, amid a resurgence of support for far-right parties.
This political turbulence has injected fresh volatility into Euro pairs, including the EUR/USD, as investors weigh the potential implications for Eurozone economic stability and policy continuity.
At the same time, worsening economic signals from Germany have led to expectations that the ECB might lower interest rates repeatedly to boost growth and inflation.
This possibility of more monetary easing has pushed down the Euro against the US Dollar, as investors foresee different paths for interest rates between the ECB and the Fed.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.06927, reflecting a decline of 0.19%. The 4-hour chart highlights a pivot point at $1.0699, which serves as a crucial indicator for the pair's direction.
Immediate resistance levels are noted at $1.0716, $1.0727, and $1.0745, while immediate support is found at $1.0672, followed by $1.0655 and $1.0641.
The Relative Strength Index (RSI) is positioned at 36, suggesting a bearish momentum in the market. Additionally, the 50-day Exponential Moving Average (EMA) at $1.0712 indicates a resistance level close to the current price, reinforcing the bearish outlook.
The technical indicators suggest that EUR/USD remains under pressure, with a bearish trend below the pivot point of $1.0699. A break below this level could trigger further declines towards the immediate support at $1.0672, and potentially lower towards $1.0655 and $1.0641.
Conversely, if the pair manages to break above the immediate resistance at $1.0716, it could signal a shift towards a bullish trend, targeting higher resistance levels at $1.0727 and $1.0745.
For traders, the recommended strategy is to sell below $1.06982, aiming for a take profit at $1.06762, with a stop loss set at $1.07109.
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