EUR/USD Price Analysis – Sep 04, 2023

Daily Price Outlook

The EUR/USD currency pair is trading at around 1.0782, slightly up by 0.05% today. This increase is mainly because the US dollar is weaker due to expectations that the Federal Reserve will stop raising interest rates. On the other hand, the European Central Bank's Governor, Pierre Wunsch, mentioned that it's too soon to stop raising rates in the Eurozone. This has also contributed to the EUR/USD pair going up.

ECB Statements Influence EUR/USD Outlook

Belgian Central Bank Governor and ECB member Pierre Wunsch suggested the ECB could take more actions in its monetary policy. He mentioned that the ECB will need to "pause the policy" at some point, but it's too early to discuss completely stopping interest rate hikes. Another ECB policymaker, Francois Villeroy de Galhau, stated that they are getting close to the highest point for interest rates, but they're not thinking about cutting rates anytime soon. In simpler terms, they might make some more changes to the policy, but they're not ready to stop raising rates or lower them at this moment.

Thus, these statements imply that the ECB is open to further monetary actions but is cautious about ending rate hikes. This could bolster confidence in the Euro (EUR) as investors see potential support for its value, potentially leading to a positive impact on the EUR/USD currency pair.

US Economic Data Boosts EUR/USD

If talking about US data, in August, the Nonfarm Payrolls (NFP) report showed 187,000 new jobs, beating expectations of 170,000 and surpassing July's 157,000. The Unemployment Rate dropped to 3.8%, lower than the expected 3.5%. However, Average Hourly Earnings only rose by 0.2%, slightly less than the anticipated 0.3%. Furthermore, the US Manufacturing PMI improved to 47.6 from the previous 46.4, better than the expected 47.0. These numbers make some think that the Federal Reserve may stop raising interest rates. Consequently, the US Dollar began losing momentum, which in turn supported gains for the EUR/USD currency pair.

Looking ahead, the US market is closed for Labor Day. Investors will pay attention to the German Trade Balance and Eurozone Sentix Investor Confidence reports. Apart from this, speeches by German Buba President Joachim Nagel and ECB President Lagarde will be watched closely. These events will influence trading decisions involving the EUR/USD pair.

EUR/USD - Technical analysis

The EUR/USD pair experienced a significant drop last Friday, reaching and surpassing our anticipated target of 1.0785. Notably, the daily candlestick closed below this level, suggesting a potential continuation of the downward trajectory in the subsequent sessions. This could pave the way for the pair to approach the next bearish target of 1.0700.

Given these developments, our short-term and intraday forecasts maintain a bearish outlook, bolstered by the downward momentum indicated by the EMA50. It's crucial to highlight that if the price breaches the 1.0785 mark and stabilizes above it, we might see an onset of recovery efforts, with an initial target set at the 1.0785 region.

Today's projected trading range lies between the support level of 1.0700 and the resistance level of 1.0845.