EUR/USD Price Analysis – May 15, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair has maintained its upward trend and remained well bid around the 1.0825 level, hitting an intraday high of 1.0835. Despite the Federal Reserve's hawkish stance, indicating a willingness to tighten monetary policy, the US dollar has been facing challenges, which in turn, has provided support for the EUR/USD currency pair.
Furthermore, the upticks in the EUR/USD pair were further bolstered by the positive results in the Eurozone ZEW Economic Sentiment Survey. The survey for May showed an improvement to 47.0, up from 43.9 in the previous month, beating expectations set at 46.1. This indicates growing optimism among financial experts and investors about the Eurozone's economic future.
Federal Reserve's Stance on Inflation and Its Impact on Currency Markets
On the US front, Federal Reserve Chairman Jerome Powell indicated that inflation is decreasing at a slower rate than anticipated, and recent Producer Price Index (PPI) data supports the decision to maintain higher interest rates for a longer duration. Powell also suggested that while the likelihood of further interest rate hikes is low, the possibility of rate cuts has diminished.
Kansas City Fed President Jeffrey Schmid highlighted that inflation levels remain too high, indicating that the central bank still has work to do in addressing this issue. These comments, considered hawkish because they prioritize controlling inflation, may strengthen the US Dollar and put pressure on major currency pairs like EUR/USD in the short term.
Investors are now awaiting the US Consumer Price Index (CPI) data for further insights. However, the hotter-than-expected CPI reading could diminish hopes for a Fed rate cut this year, potentially boosting the US dollar against the Euro.
Impact of Upbeat Eurozone Economic Sentiment and GDP Growth Expectations on EUR/USD Pair
Another factor that has been boosting the EUR/USD pair is the upbeat ZEW Economic Sentiment Survey results. The Eurozone ZEW Economic Sentiment Survey improved to 47.0 in May from 43.9 in the previous month, surpassing expectations set at 46.1. This positive sentiment reflects growing optimism among financial experts and investors regarding the Eurozone's economic outlook.
The upbeat ZEW survey has provided some support to the major pair for the time being, bolstering confidence in the Euro. However, the focus now shifts to the upcoming European GDP growth numbers. Analysts estimate that Eurozone GDP will grow by 0.3% quarter-on-quarter in the first quarter, with annualized GDP growth forecasted to hold steady at 0.4% year-on-year.
These GDP figures will be closely watched by market participants for further insights into the Eurozone's economic recovery trajectory. Hence, the positive GDP growth numbers could fuel additional strength in the EUR/USD pair, while any disappointments may lead to a temporary reversal for the Euro against the US dollar.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.08233, showing a slight increase of 0.04% for the day. The 4-hour chart reveals crucial levels that could influence the pair's direction. The pivot point, highlighted in green, is at $1.08140, serving as a key reference level for traders.
Immediate resistance is identified at $1.08423, with further resistance at $1.08630 and $1.08835. A break above these levels would indicate a stronger bullish momentum, potentially leading to further gains. Conversely, immediate support is found at $1.07897, followed by $1.07669 and $1.07386. Falling below these support levels could signal a bearish reversal.
Technical indicators provide additional insights into the market conditions. The Relative Strength Index (RSI) is at 66, suggesting that the market is nearing overbought territory but still has room for further upward movement. The 50-day Exponential Moving Average (EMA) is at $1.07843, which aligns closely with the current price, reinforcing the medium-term bullish trend.
The overall technical outlook for EUR/USD remains bullish above the pivot point of $1.08140. A break above this level could encourage more buying interest, targeting the immediate resistance levels. However, if the pair fails to maintain above the pivot point, it may test the immediate support levels, leading to potential downside risks.
In conclusion, the recommended entry price for a buy is at $1.08150, with a take profit target at $1.08415 and a stop loss at $1.08000.
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