Technical Analysis

EUR/USD Price Analysis – Nov 03, 2023

By LonghornFX Technical Analysis
Nov 3, 20234 min

Daily Price Outlook

During Friday's European session, the EUR/USD currency pair continued its upward momentum and showed signs of strength. However, this increase can be attributed to the correction of the US Dollar, which occurred after the Federal Open Market Committee (FOMC) decided to maintain unchanged interest rates during its policy meeting on Wednesday. As of now, the EUR/USD pair has gained 0.24% for the day and is trading at 1.0596.

FOMC Maintains Rates Amid Doubts About Further Hikes

It's worth noting that the FOMC's recent decision in November, which aligned with market expectations, maintained interest rates within the range of 5.25% to 5.50%. This decision marked the first pause in the current rate-hiking cycle. However, US Treasury bond yields and the Dollar declined, as investors began to doubt the likelihood of further rate hikes.

Federal Reserve Chair Jerome Powell aimed to reassure the markets by emphasizing the committee's commitment to controlling inflation and reaching the 2% target. However, their future actions will primarily depend on new data. Powell's message was intended to assure everyone that their main focus is managing inflation, but they will proceed cautiously and closely monitor developments before making significant policy changes.

Therefore, the EUR/USD pair witnessed a positive impact as the FOMC's decision to maintain rates and Powell's commitment to managing inflation weakened the US Dollar, causing the Euro to strengthen.

ECB Officials Address Persistent Eurozone Inflation Concerns

Besides this, European Central Bank (ECB) officials, Luis de Guindos and Joachim Nagel, underscored concerns about inflation in the Eurozone. Guindos expressed optimism regarding the recent Consumer Price Index (CPI) data, which showed a decrease in Eurozone inflation—an encouraging development for the ECB. Nagel echoed this stance, emphasizing the importance of maintaining higher interest rates for an extended period.

Despite a significant decrease over the past year, Eurozone inflation continues to be a challenging issue. Both officials emphasized the persistent difficulty of controlling inflation within the Eurozone. Their comments highlight the ECB's dedication to maintaining a watchful approach to interest rates over an extended period to address these economic concerns.

Thus, these inflation concerns from ECB officials may put upward pressure on the Euro, potentially impacting the EUR/USD pair positively.

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

EUR/USD - Technical Analysis

Amidst the constant ebb and flow of the financial markets, the EUR/USD pair presents a curious case for analysis on this 3rd of November. With a current price of 1.06297, reflecting a slight uptick of 0.05% within a 24-hour window, the currency pair beckons a closer examination through the lens of technical analysis.

The pair finds its equilibrium at a pivot point of 1.0596, around which it oscillates with a delicate balance of bullish and bearish sentiments. The immediate resistance level is observed at 1.0665, with subsequent barriers at 1.0768 and 1.0837 potentially capping upward movements. Conversely, support levels are firmly established at 1.0494, followed by 1.0422 and 1.0322, serving as crucial cushions in the event of a downward correction.

The Relative Strength Index (RSI), stationed at a modest 39, leans towards bearish sentiment, with the currency pair yet to venture into the oversold territory. This indicates a potential for further decline unless a reversal in buying pressure emerges.

The 50-Day Exponential Moving Average (EMA) is currently set at 1.0591. With the price hovering just above this level, there's a subtle indication of a short-term bullish trend, yet the close proximity calls for caution, as a slip below could swiftly change the trend to bearish.

An in-depth dive into the 4-hour chart reveals a consolidation pattern, akin to a symmetrical triangle, with the EUR/USD pair coiling tighter as it approaches the apex. Candlestick analysis shows a series of doji candles, signaling indecision among traders. However, a recent bullish candle with a long wick suggests an attempt to break higher.

In conclusion, the overall trend for EUR/USD appears tentatively bullish, provided it sustains above the 1.06141 level. Should this bullish bias prevail, we may expect the pair to challenge the immediate resistance at 1.0665 in the short term. However, traders should tread with caution, keeping an eye on the aforementioned technical indicators and chart patterns, as they navigate the nuanced dance of the EUR/USD pair in the forex market.

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