EUR/USD Price Analysis – Sep 27, 2023

Daily Price Outlook

During the European session on Wednesday, the EUR/USD pair failed to stop its losing streak and experienced a significant decline, dropping to around 1.0550, the lowest point since March 16. However, this marked a clear bearish phase for the pair. However, the reason for its downward trend could be linked to the bullish US dollar, which was backed by the Federal Reserve's hawkish stance. Consequently, the USD gained ground against major currencies, including the Euro. On the flip side, the European Central Bank (ECB) adopted a dovish approach regarding rate hikes, which weighed down the Euro. This dovish stance contributed to the potential for further losses for the EUR/USD pair.

Factors Driving the Strength of the US Dollar and its Impact on EUR/USD Pair

The broad-based US dollar has been gaining traction and is currently near a 10-month high. However, this surge is primarily driven by the belief that the Federal Reserve will maintain high interest rates for the future. The Federal Reserve recently hinted at the possibility of raising interest rates again within this year due to concerns about persistent inflation. Another factor that has been boosting the US dollar is the tendency of investors to seek safety in it during uncertain times. This behavior further adds downward pressure on the EUR/USD pair.

Factors Influencing EUR/USD Pair and Key Events to Monitor

Apart from this, the European Central Bank (ECB) recently hinted at maintaining low interest rates, which was seen as another key factor that has been weighing on the EUR/USD pair. Meanwhile, the ECB revised down its forecasts for inflation and economic growth in 2024 and 2025, indicating a slowdown in potential rate hikes. Moreover, there's also a growing discussion about a contraction in the economy later in the year, suggesting that the ECB's tightening policy might have reached its peak. All these factors has been pushing the EUR/USD pair down.

Looking ahead, traders are watching the German Consumer Confidence, US Durable Goods Orders, German inflation data, and final US economic growth numbers. Fed Chair Jerome Powell's speech and US price index at week's end will be key events to watch.

EUR/USD - Technical Analysis

The EUR/USD pair demonstrates an enhanced bearish tendency, progressively nearing our anticipated target of 1.0515. We project the persistence of this negative trajectory, aiming for further declines towards the 1.0440 zone.

Within the context of the bearish channel depicted on the chart, and backed by the downward pressure from the EMA50, the bearish outlook remains pertinent for the foreseeable future.

It's crucial to underscore that maintaining levels below 1.0635 is a primary prerequisite to realize these targets. Today's projected trading band spans from a support at 1.0470 to a resistance at 1.0620, with the prevailing sentiment being bearish.