EUR/USD Price Analysis – Nov 20, 2023

Daily Price Outlook

The EUR/USD currency pair maintained its upward momentum and drew some additional bids around above 1.0930 during the European session on Monday. However, the reason for its bullish trend can be attributed to the weakening US dollar and hawkish remarks from ECB policymakers. Notably, the US Dollar started the new week on a bearish note, serving as key factor pushing the EUR/USD pair higher. Moving ahead, traders seem cautious to place any strong position ahead of the release of the FOMC meeting minutes.

US Dollar's Decline and Market Expectations Impacting EUR/USD Pair

It is worth noting that the broad-based US Dollar failed to break its losing streak, reaching a two-and-a-half-month low. However, the driving force behind this trend is the growing belief that the Federal Reserve (Fed) is unlikely to raise interest rates. This sentiment gained strength as US data showed that inflation was slowing down more than anticipated. Hence, the decline in the US dollar further boosted the EUR/USD pair.

Moreover, there is a increasing anticipation in the markets for potential rate cuts in the first half of 2024. This has led to a decrease in US Treasury bond yields, with the 10-year bond hitting a two-month low of 4.379% on Friday.

ECB Officials' Hawkish Stance Boosts EUR/USD Pair

Another factor that has been contributing to the upward momentum of the EUR/USD pair is the hawkish stance from European Central Bank (ECB) officials on Friday, rejecting the notion of an early rate cut. Bundesbank President Joachim Nagel cautioned against initiating rate cuts prematurely.

Furthermore, ECB policymaker Robert Holzmann argued that a rate cut in the second quarter would be premature. Thus, this scenario reinforces the short-term positive outlook for the EUR/USD pair, significantly favoring bullish traders.

EUR/USD - Technical Analysis

The EUR/USD experienced a modest ascent in today's trading, appreciating by 0.12% to $1.09244. It finds itself grappling with a pivot point at $1.0999, suggesting a tentative balance between buyers and sellers. A sequence of resistance levels lies overhead, with $1.1081 as the nearest hurdle, followed by $1.1246 and $1.1410, delineating the upper bounds of recent trading ranges. Should the pair wane, immediate support awaits at $1.0835, with successive safety nets at $1.0747 and $1.0583.

The Relative Strength Index (RSI) resides at a lofty 75, venturing into overbought territory—a signal that the market may soon seek equilibrium, possibly through a corrective pullback. The MACD's marginal elevation above its signal line at 0.0001 against 0.0038 indicates only the faintest bullish momentum. However, the currency pair's trading above the 50 EMA of $1.0889 corroborates a short-term bullish trend.

The chart showcases a trio of 'Three White Soldiers' candlesticks on the 4-hour chart, a bullish formation typically indicative of a robust buying trend. This pattern aligns with the other indicators to suggest a continuing bullish sentiment.

The EUR/USD's technical posture is cautiously optimistic, maintaining bullishness above the 1.0895 mark. The currency pair's proximity to key technical indicators underpins the possibility of it challenging the immediate resistance level in the near term. However, the elevated RSI warrants vigilance for signs of an impending retracement.

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