EUR/USD Price Analysis – March 22, 2024
Daily Price Outlook
During early European trading session on Friday, the EUR/USD currency pair has been experiencing a downward trend and hit the intra-day low around the 1.0816 mark. However, this decline is driven by the renewed strength of the US Dollar and higher US Treasury bond yields. Furthermore, the disappointing Eurozone Manufacturing Purchasing Managers' Index (PMI) data was seen as another key factor that put bearish pressure on the EUR/USD currency pair. Investors are closely monitoring the performance of the pair as they await key economic indicators and central bank statements.
Federal Reserve Signals Potential Rate Cuts, US S&P Global Composite PMI Moderates
On the US front, Federal Reserve Chair Jerome Powell suggested three possible interest rate cuts in 2024, lifting investor confidence and boosting market activity. However, the S&P Global Composite Purchasing Managers' Index (PMI) showed a slight decrease to 52.2 in March from the previous 52.5. Despite this, the Manufacturing PMI increased to 52.5, surpassing expectations, while the Services PMI fell to 51.7, lower than predicted.
Jerome Powell's rate cut hints boosted the USD, pressuring the EUR/USD pair downward. While the US PMI showed mixed results, any signs of US economic strength tend to strengthen the dollar against the euro.
Eurozone Manufacturing PMI Slips, Impacting EUR/USD Pair
In contrast to the US data, the Eurozone's Manufacturing PMI declined to 45.7 in March from the previous reading of 46.5, marking a three-month low. This disappointing figure fell short of the consensus forecast of 47.0. However, the Services PMI improved to 51.1 in March, beating expectations and indicating resilience in the services sector. Despite this mixed performance, the Eurozone PMI Composite rose to 49.9 in March, slightly surpassing expectations and signaling overall economic expansion.
Therefore, the Eurozone's weak Manufacturing PMI weighed on the EUR/USD pair, as it highlighted economic struggles. However, the improved Services PMI and Composite PMI have provided some support, indicating a mixed impact.
Upcoming Data Releases Could Impact EUR/USD Direction
Traders are closely monitoring upcoming data releases and central bank speeches for further insights into the direction of the EUR/USD pair. Specifically, attention will be focused on the German IFO Business Climate index, which could provide clues about the health of the Eurozone's largest economy. Additionally, speeches from Fed Chair Powell and other officials will be scrutinized for any hints regarding future monetary policy decisions.
EUR/USD - Technical Analysis
On March 22, the EUR/USD pair registered a decrease, falling by 0.26% to a rate of 1.08318. This movement indicates a bearish sentiment in the market, as the pair trades below the pivotal 1.0869 mark. Resistance levels are observed at 1.0898, 1.0936, and 1.0964, suggesting potential ceilings the pair might face in its upward trajectory. Conversely, support levels are positioned at 1.0799, 1.0764, and 1.0733, marking critical zones where the price could find a floor in the event of further declines.
The Relative Strength Index (RSI) stands at 38, pointing towards a bearish momentum, while the 50-Day Exponential Moving Average (EMA) at 1.0895 currently lies just above the day's closing price, underscoring the downward pressure. A bearish engulfing candle formation on the 4-hour timeframe near the 1.0830 level reinforces the expectation of continued downtrend for the EUR/USD pair.
Considering the technical landscape, the market outlook for the EUR/USD is bearish, prompting a recommended trading strategy with a sell limit order at 1.0869. This strategy targets a take profit at 1.0799 and sets a stop loss at 1.0898 to safeguard against potential upward movements.
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