Technical Analysis

EUR/USD Price Analysis – Nov 17, 2023

By LonghornFX Technical Analysis
Nov 17, 20233 min

Daily Price Outlook

During the European session on Friday, the EUR/USD pair prolonged its downward trend, hovering around the 1.0900 mark. However, the decline was influenced by the belief that the European Central Bank (ECB) would maintain a dovish stance, hindering any upward movement in the pair.

At the same time, traders seems cautious to place any strong position as they awaited further clarity on the future policy decisions of the Federal Reserve before committing to new market positions. On the other hand, the US dollar remained weakened amid expectations that the Fed would not be quick to raise interest rates, thereby offering some support to the EUR/USD pair.

Recent Economic Indicators and Their Impact on EUR/USD

It's important to mention that the recent softer US Consumer Price Index (CPI) report, combined with the drop in Crude Oil prices, is giving hope for lower inflation. This could bring the Federal Reserve (Fed) closer to its 2% target. Furthermore, a higher-than-expected increase in US Initial Jobless Claims suggests a cooling job market, reinforcing expectations that the Fed won't raise interest rates soon.

Therefore, the yield on the 10-year US government bond hit a two-month low, affecting the US Dollar negatively. This is good news for the EUR/USD pair, as the Euro benefits from the weakened Dollar.

Factors Affecting EUR/USD Dynamics and Near-Term Market Outlook

Furthermore, investors are adopting a cautious stance in the stock markets, thereby preventing a rapid decline in the safe-haven US Dollar. There is a prevailing belief that the European Central Bank (ECB) could potentially reduce interest rates by March 2024. This circumspect behavior among traders is hindering substantial speculation on the Euro, resulting in limited gains for the EUR/USD pair.

Looking ahead, investors are currently directing their attention towards the upcoming Eurozone Consumer Price Index (CPI) release. Following this, the focus is set to shift to key data from the US housing market, specifically Building Permits and Housing Starts.

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

EUR/USD - Technical Analysis

The EUR/USD pair shows tepid movement, modestly down by 0.01%, stabilizing at 1.08526. The forex duo is currently navigating a delicate balance, with a pivot point at 1.0844 signaling the critical juncture of either continuation of the current trend or a reversal. Resistance levels are staged at 1.0889 and 1.0929, which could cap upward movements, while support at 1.0743 followed by 1.0700 and 1.0641 provide downside buffers.

The currency pair's technical indicators offer a mixed sentiment; the RSI is positioned at 63, indicating a generally bullish market but not excessively so. The MACD’s neutral stance with a value of 0.00 suggests the market is in a state of equilibrium, awaiting directional cues.

Notably, the price maintains its stance above the 50-day EMA of 1.0765, affirming a short-term bullish trend.

An observed upward channel breakout at 1.07923 reinforces the prevailing uptrend, suggesting that the EUR/USD may gather the necessary momentum to test higher resistance levels.

However, this bullishness is conditional on the pair sustaining above the 1.08296 threshold, which would confirm the continuation of the upward trajectory.

In conclusion, while the EUR/USD pair's immediate outlook appears bullish, underpinned by its positioning above the 50 EMA and the RSI's positive signal, traders remain vigilant. The currency market is known for its volatility, and a shift in economic reports or geopolitical events could rapidly alter the current dynamics.

Investors are poised to respond to the next set of economic data releases, which could provide the impetus for the EUR/USD to test the projected resistance levels or retreat to its support zones.

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