EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate Resistance at $1.12153; breaking higher could target $1.12309.
- Immediate Support at $1.11618; the 50-day EMA at $1.11418 offers strong support.
- RSI at 65 indicates bullish momentum but could near overbought territory if it rises further.
The EUR/USD pair is trading at $1.11872, up 0.07%, as it consolidates near recent highs. A break above the pivot point at $1.11983 could signal further bullish momentum, especially as traders eye immediate resistance at $1.12153. Additional resistance levels to watch include $1.12309 and $1.12485, which, if breached, could drive the pair higher in the short term.
On the downside, the immediate support level rests at $1.11618, followed by deeper supports at $1.11509 and $1.11350. The 50-day Exponential Moving Average (EMA), currently positioned at $1.11418, offers a strong support base, signaling a bullish outlook as long as the price remains above this average.
The Relative Strength Index (RSI) is currently at 65, indicating a bullish trend, but a move above 70 would signal overbought conditions, potentially leading to short-term profit-taking.
For short-term traders, a buy limit order around $1.11770 could provide an attractive entry point, targeting a take-profit level at $1.12153, with a conservative stop-loss set at $1.11626. This setup provides a balanced approach, capitalizing on upward momentum while safeguarding against downside risk.
EUR/USD - Trade Ideas
Entry Price – Buy Limit 1.11770
Take Profit – 1.12153
Stop Loss – 1.11626
Risk to Reward – 1: 2
Profit & Loss Per Standard Lot = +$383/ -$144
Profit & Loss Per Mini Lot = +$38/ -$14
EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD is consolidating near $1.11625, with resistance at $1.1181 and pivot at $1.1199.
- RSI at 58 signals mild bullish momentum, with room for further gains.
- The 50-day EMA at $1.1103 provides critical support, maintaining the bullish bias.
The EUR/USD pair is currently trading at $1.11625, marking a flat session with minimal movement. The market is in a phase of consolidation, with a neutral bias, though technical indicators suggest the potential for further upside in the coming sessions.
The key to unlocking the next move lies around the pivot point at $1.1199. Should the pair break above this level, immediate resistance awaits at $1.1181, followed by stronger barriers at $1.1210 and $1.1241.
On the downside, the first line of support is at $1.1118, with deeper supports at $1.1094 and $1.1067.
The technical indicators support a cautious bullish outlook. The Relative Strength Index (RSI) stands at 58, indicating positive momentum but not yet overbought territory, leaving room for further gains.
Meanwhile, the 50-day Exponential Moving Average (EMA) is positioned at $1.1103, providing a solid foundation for the pair. As long as the EUR/USD remains above this level, the overall trend favors the bulls.
In terms of trade strategy, a buy-above approach seems prudent, with an entry point at $1.11466. A reasonable profit target would be the pivot level of $1.11988, with a stop-loss set at $1.11174 to mitigate downside risk.
Given the relative calm in the market, the focus will be on whether the pair can gather enough momentum to break through resistance levels and sustain any rally.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.11466
Take Profit – 1.11988
Stop Loss – 1.11174
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$522/ -$292
Profit & Loss Per Mini Lot = +$52/ -$29
EUR/USD Price Analysis – Sep 23, 2024
Daily Price Outlook
During the European trading session, the EUR/USD extended its downward trend, dropping to the 1.1111 level and hitting an intra-day low of 1.1083. This decline was primarily driven by disappointing German economic data, which weighed heavily on the pair.
The downturn in Germany’s manufacturing sector worsened in September, while services sector activity also suffered, as highlighted by the preliminary HCOB business activity report.
Moreover, the European Central Bank’s cautious approach to monetary policy and uncertainty about the eurozone’s economic outlook further dampened investor confidence.
In the meantime, the renewed mild strength in the US dollar ahead of US Purchasing Managers Index (PMI) also played a major role in pushing the EUR/USD pair lower.
Economic Challenges in Germany and Their Impact on the EUR/USD Pair
On the EUR front, Germany's manufacturing sector is facing significant challenges, with a downturn worsening in September.
The HCOB Manufacturing PMI fell to 40.3 this month, down from 42.4 in August and below the expected 42.4. This marks a yearly low for the sector, indicating a slowdown in manufacturing activity.
In addition, the services sector is also struggling, as shown by a decline in the Services PMI from 51.2 in August to 50.6 in September, falling short of the forecasted 51.0.
The HCOB Preliminary German Composite Output Index came in at 47.2, lower than the expected 48.2 and down from 48.4 in August, reaching its weakest point in seven months.
These figures highlight the ongoing economic difficulties in Germany, raising concerns about the overall health of the eurozone economy.
Therefore, the worsening manufacturing and services data in Germany raises concerns about economic stability, likely putting downward pressure on the EUR/USD pair as investors anticipate further challenges for the eurozone economy.
Impact of ECB's Flexible Monetary Policy on EUR/USD Pair
Moreover, European Central Bank President Christine Lagarde emphasized the need for flexible monetary policy in her recent speech. She stated that while the main goal of maintaining price stability remains the same, central banks must adapt to the rapidly changing global economy.
This flexibility is crucial for effectively addressing various challenges. By highlighting this, Lagarde acknowledges the current uncertainties in the market and the importance of adjusting policies to ensure economic stability and support growth in the eurozone.
Therefore, the Lagarde's focus on flexible monetary policy may lead to uncertainty about the ECB's future actions, likely putting downward pressure on the EUR/USD pair as traders reassess the euro's strength.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.11625, marking a flat session with minimal movement. The market is in a phase of consolidation, with a neutral bias, though technical indicators suggest the potential for further upside in the coming sessions.
The key to unlocking the next move lies around the pivot point at $1.1199. Should the pair break above this level, immediate resistance awaits at $1.1181, followed by stronger barriers at $1.1210 and $1.1241.
On the downside, the first line of support is at $1.1118, with deeper supports at $1.1094 and $1.1067.
The technical indicators support a cautious bullish outlook. The Relative Strength Index (RSI) stands at 58, indicating positive momentum but not yet overbought territory, leaving room for further gains.
Meanwhile, the 50-day Exponential Moving Average (EMA) is positioned at $1.1103, providing a solid foundation for the pair. As long as the EUR/USD remains above this level, the overall trend favors the bulls.
In terms of trade strategy, a buy-above approach seems prudent, with an entry point at $1.11466. A reasonable profit target would be the pivot level of $1.11988, with a stop-loss set at $1.11174 to mitigate downside risk.
Given the relative calm in the market, the focus will be on whether the pair can gather enough momentum to break through resistance levels and sustain any rally.
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EUR/USD Price Analysis – Sep 20, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair extended its upward momentum, gaining strength around the 1.1180 level.
The Euro (EUR) is rallying, fueled by growing speculation that the European Central Bank (ECB) will keep its Deposit Facility rate steady at 3.5% during its October meeting.
Meanwhile, the US dollar (USD) is facing a bearish trend, which is contributing to the rise of the euro. The US Dollar Index (DXY), which measures the Greenback against six major currencies, remains just above its year-to-date low of 100.21.
This combination of factors is helping to bolster the EUR/USD pair as traders navigate the shifting economic landscape.
US Dollar Weakens Amid Fed Rate Cuts, Boosting EUR/USD Momentum
The US dollar has weakened following the Federal Reserve's recent interest rate cut, as expectations rise that the central bank will continue easing its policies.
The Fed recently reduced rates by 50 basis points to stimulate the labor market while inflation approaches its 2% target. According to the latest dot plot, Fed officials expect the federal funds rate to reach around 4.4% by the end of the year.
However, traders anticipate further declines, with predictions suggesting rates could drop by up to 75 basis points, potentially bringing them down to a range of 4.00% to 4.25%, as indicated by the CME FedWatch tool.
This suggests a more cautious stance from the Fed as it navigates a challenging economic environment.
Therefore, the Fed's interest rate cut and expectations for further easing have weakened the US Dollar, making the Euro more attractive. This has contributed to the EUR/USD pair's upward momentum, pushing it higher as traders react to the shifting economic landscape.
EUR/USD Gaining Momentum as ECB Signals Steady Interest Rates
On the EUR front, the EUR/USD pair is gaining momentum, aiming to break through the key resistance level of 1.1200 during Friday’s European session.
The Euro is strengthening amid growing speculation that the European Central Bank (ECB) will keep its Deposit Facility rate unchanged at 3.5% in the upcoming October meeting.
Some ECB officials have expressed a preference for a gradual approach to policy easing, seeking more evidence of a slowdown in inflation.
Recent comments from policymakers, including Peter Kazimir, Isabel Schnabel, and Joachim Nagel, suggest that price pressures are still above the bank's target.
Specifically, Isabel Schnabel highlighted that persistent inflation in the services sector is keeping overall inflation elevated. Investors are now looking forward to ECB President Christine Lagarde’s speech at 15:00 GMT for more insights on interest rates.
In her recent remarks at the ECB's press conference on September 12, Lagarde emphasized that future interest rate decisions will hinge on inflation assessments and incoming economic data.
She stressed the need to understand underlying inflation dynamics and the effectiveness of monetary policy before committing to a specific rate path.
As a result, the EUR/USD pair is likely to rise as the Euro gains strength from speculation of unchanged interest rates from the ECB. Positive sentiment from ECB officials and anticipation of Lagarde's speech could further support the pair's upward momentum.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.11650, up by 0.04%, maintaining a slightly bullish tone as it holds above the key pivot point at $1.1146. Immediate resistance is seen at $1.1181, with additional resistance targets at $1.1210 and $1.1241.
A break above these levels could indicate further upside potential for the euro, especially if market sentiment towards the U.S. dollar remains weak.
On the downside, immediate support is located at $1.1118, followed by $1.1094 and $1.1067. These levels could serve as key turning points if bearish pressure intensifies.
The 50-day Exponential Moving Average (EMA) at $1.1131 is providing near-term support, reinforcing the bullish bias as long as prices stay above this level.
The Relative Strength Index (RSI) currently stands at 58, suggesting that the market still has room to move higher before hitting overbought territory.
With the RSI not yet signaling overextension, there is potential for the pair to continue its upward momentum. However, traders should monitor any break below $1.1118, which could signal a deeper pullback or trend reversal.
In conclusion, the EUR/USD outlook remains bullish as long as the pair holds above $1.1146. A break above $1.1181 would confirm continued bullish momentum, while a fall below $1.1118 could lead to a bearish correction.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD bullish above $1.1146, with resistance targets at $1.1181 and $1.1210.
- 50-day EMA at $1.1131 supports the upward trend, reinforcing bullish sentiment.
- RSI at 58 suggests there is room for further gains before overbought conditions emerge.
The EUR/USD pair is trading at $1.11650, up by 0.04%, maintaining a slightly bullish tone as it holds above the key pivot point at $1.1146. Immediate resistance is seen at $1.1181, with additional resistance targets at $1.1210 and $1.1241.
A break above these levels could indicate further upside potential for the euro, especially if market sentiment towards the U.S. dollar remains weak.
On the downside, immediate support is located at $1.1118, followed by $1.1094 and $1.1067. These levels could serve as key turning points if bearish pressure intensifies.
The 50-day Exponential Moving Average (EMA) at $1.1131 is providing near-term support, reinforcing the bullish bias as long as prices stay above this level.
The Relative Strength Index (RSI) currently stands at 58, suggesting that the market still has room to move higher before hitting overbought territory. With the RSI not yet signaling overextension, there is potential for the pair to continue its upward momentum.
However, traders should monitor any break below $1.1118, which could signal a deeper pullback or trend reversal.
In conclusion, the EUR/USD outlook remains bullish as long as the pair holds above $1.1146. A break above $1.1181 would confirm continued bullish momentum, while a fall below $1.1118 could lead to a bearish correction.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.11466
Take Profit – 1.11988
Stop Loss – 1.11174
Risk to Reward – 1: 1.7
Profit & Loss Per Standard Lot = +$522/ -$292
Profit & Loss Per Mini Lot = +$52/ -$29
EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate resistance at $1.1135, with support at $1.1094, marks critical levels.
- RSI at 60 suggests moderate bullish momentum but not overbought.
- 50-day EMA at $1.1074 provides strong near-term support, reinforcing the uptrend.
EUR/USD is trading at $1.11258, up 0.11%, showing mild bullish momentum as it approaches key resistance levels. The pair is hovering above its pivot point at $1.1113, indicating that buying interest remains strong for the time being.
Immediate resistance is seen at $1.1135, followed by additional hurdles at $1.1155 and $1.1185. On the downside, the first support sits at $1.1094, with further levels at $1.1072 and $1.1049.
The RSI has reached 60, signaling that momentum is leaning toward the bullish side but is not yet overbought. The 50-day EMA is positioned at $1.1074, providing a solid foundation of support that reinforces a short-term bullish bias.
As long as the pair remains above this moving average, the outlook remains favorable for further gains.
Traders are likely focusing on upcoming economic data and central bank comments, as any shifts in sentiment could introduce volatility. A break above $1.1135 would confirm the continuation of the uptrend, with a potential move toward the next resistance level at $1.1155. Entry points for buyers are recommended above $1.11134, with a take profit target at $1.11504 and a stop-loss placed at $1.10948.
However, should the pair fall below the $1.1094 support level, bearish sentiment could take hold, pushing the price further toward the next key support at $1.1072.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.11134
Take Profit – 1.11504
Stop Loss – 1.10948
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$370/ -$186
Profit & Loss Per Mini Lot = +$37/ -$18
EUR/USD Price Analysis – Sep 18, 2024
Daily Price Outlook
During European trading, the EUR/USD pair remains steady above 1.1100, supported by ongoing weakness in the US dollar as traders anticipate the Federal Reserve's policy decision at 18:00 GMT.
Market sentiment is leaning towards a 50-basis-point rate cut by the Fed, which has contributed to the dollar's decline and boosted the EUR/USD pair.
However, the Euro faces some pressure due to uncertainty surrounding the European Central Bank's (ECB) future rate decisions and the overall economic outlook for the Eurozone.
Moving ahead, Eurostat will release the final Harmonized Index of Consumer Prices (HICP) for August at 09:00 GMT. Economists expect the data to align with preliminary estimates, forecasting annual headline inflation at 2.2% and core inflation at 2.8%.
US Retail Sales Data Creates Brief Rebound for Dollar, But Fed Rate Cut Expectations Weigh on EUR/USD
On the US front, recent economic data showed a small increase in Retail Sales for August, rising by 0.1% instead of the expected decline of 0.2%. However, sales excluding autos also grew by just 0.1%, missing forecasts.
This data led to a brief rebound in the US Dollar as traders adjusted their positions, moving it away from its lowest level since July 2023. Despite this, the US Dollar's gains were limited because traders still expect the Federal Reserve to cut interest rates more aggressively.
Markets are currently pricing in a 65% chance that the Fed will lower rates by 50 basis points at the end of its meeting today. This expectation is putting pressure on the US Dollar and supporting the EUR/USD pair.
Even though there was a slight bounce in the yield of the 10-year US government bond after the retail sales data, it did not significantly affect the market, as expectations for a more dovish Fed continue to dominate.
Uncertainty Over ECB Rate Decisions Drives Volatility in EUR/USD Pair
On the other side, the gain in the EUR/USD pair could be limited due to uncertainty about the European Central Bank's (ECB) future interest rate decisions and the Eurozone's economic outlook.
ECB officials are divided on whether to cut rates further. François Villeroy de Galhau, a member of the ECB Governing Council and President of the Bank of France, suggested that more rate cuts might be necessary to prevent inflation from falling too low. He indicated that the ECB is likely to continue cutting rates.
In contrast, Peter Kazimir, another ECB Governing Council member, argued that it might be better to wait until December for a clearer economic picture before making further rate cuts.
He expressed concerns about cutting borrowing costs too quickly if inflation has not been fully addressed.
Financial markets expect the ECB to make one more rate cut later this year, either in October or December, as they await more clarity on the economic situation.
Therefore, the uncertainty over ECB rate decisions is likely to keep the EUR/USD pair volatile. Divergent views among ECB officials create market hesitation, which may lead to fluctuating Euro strength against the US Dollar until a clearer policy direction emerges.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.11258, up 0.11%, showing mild bullish momentum as it approaches key resistance levels. The pair is hovering above its pivot point at $1.1113, indicating that buying interest remains strong for the time being.
Immediate resistance is seen at $1.1135, followed by additional hurdles at $1.1155 and $1.1185. On the downside, the first support sits at $1.1094, with further levels at $1.1072 and $1.1049.
The RSI has reached 60, signaling that momentum is leaning toward the bullish side but is not yet overbought. The 50-day EMA is positioned at $1.1074, providing a solid foundation of support that reinforces a short-term bullish bias.
As long as the pair remains above this moving average, the outlook remains favorable for further gains.
Traders are likely focusing on upcoming economic data and central bank comments, as any shifts in sentiment could introduce volatility.
A break above $1.1135 would confirm the continuation of the uptrend, with a potential move toward the next resistance level at $1.1155. Entry points for buyers are recommended above $1.11134, with a take profit target at $1.11504 and a stop-loss placed at $1.10948.
However, should the pair fall below the $1.1094 support level, bearish sentiment could take hold, pushing the price further toward the next key support at $1.1072.
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EUR/USD Price Analysis – Sep 16, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair continued its bullish trend, moving higher to around 1.1126 and reaching an intraday peak of 1.1130.
The upward momentum was largely driven by mounting expectations that the US Federal Reserve will aggressively ease its policies, putting significant bearish pressure on the US dollar.
The US Dollar Index (DXY) slid sharply to around 100.70, reflecting the Greenback’s weakening position.
Meanwhile, the Euro's performance against its major peers remained mixed due to uncertainty surrounding the European Central Bank’s (ECB) future interest rate cuts.
The ECB's recent decision to lower the Deposit Facility Rate by 25 basis points to 3.50% provided some support, but the lack of a clear rate-cut trajectory kept the market cautious. Despite this, the bearish sentiment surrounding the USD helped sustain the EUR/USD gains.
EUR/USD Rises on Fed Rate Cut Speculation and Weaker US Dollar
On the US front, the EUR/USD pair has been climbing due to growing speculation that the Federal Reserve (Fed) will aggressively ease its policies on Wednesday.
This anticipation has weakened the US Dollar (USD), causing the US Dollar Index (DXY) to drop sharply to around 100.70.
According to the CME FedWatch tool, the chance of the Fed cutting interest rates by 50 basis points (bps) to a range of 4.75%-5.00% this September has surged to 61%, up from 30% a week ago.
This shift follows the release of August’s Producer Price Index (PPI), which showed a lower-than-expected increase in inflation, rising just 1.7% year-over-year compared to estimates of 1.8% and July’s 2.1%.
Therefore, the increased speculation about the Fed's aggressive rate cut and the weaker US Dollar have bolstered the EUR/USD pair, driving it higher.
The DXY's sharp decline and the lower-than-expected PPI data have further supported the Euro’s strength.
EUR/USD Strengthens Amid Weaker US Dollar and ECB Rate Cut Uncertainty
On the EUR front, the EUR/USD pair is rising due to the weakening US Dollar. However, the Euro (EUR) has shown mixed performance against other major currencies because of uncertainty over the European Central Bank’s (ECB) future interest rate cuts.
The ECB recently lowered its Deposit Facility Rate by 25 basis points to 3.50% but has not provided a clear path for future rate cuts. ECB President Christine Lagarde mentioned that future rate decisions will depend on inflation trends and economic data.
Despite this, recent comments from ECB officials suggest that the fight against Eurozone inflation might be nearing its end. ECB Governing Council member Joachim Nagel expressed optimism, stating that inflation is expected to hit the 2% target by the end of next year.
However, financial markets anticipate one more rate cut in the final quarter of the year due to concerns about the German economy.
Analysts at Nomura highlighted structural issues such as Germany’s exposure to global manufacturing cycles, energy price impacts, and demographic challenges that could contribute to a recession.
Therefore, the EUR/USD pair benefits from the weakening US Dollar and the ECB's recent rate cut.
Despite mixed Euro performance due to uncertain future ECB actions, the anticipation of one more rate cut and optimism about inflation targeting 2% support the Euro's strength.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.11187, up 0.21% as the pair continues its upward trajectory, reflecting strong bullish sentiment. Immediate resistance lies at $1.1125, followed by $1.1151 and $1.1185.
The pair remains supported above its pivot point at $1.1101, signaling potential for further upside. However, with the Relative Strength Index (RSI) reaching 73, overbought conditions suggest that a short-term pullback may be on the horizon.
On the downside, immediate support is seen at $1.1072, followed by $1.1049 and deeper support at $1.1017. The 50-day Exponential Moving Average (EMA) at $1.1050 provides a key level of support, reinforcing the overall bullish trend.
A sustained move above $1.1125 would solidify the upward momentum, though traders should be cautious given the elevated RSI.
Traders are looking to enter above $1.11126 with a take-profit target at $1.11446, positioning the pair for a test of higher resistance.
However, a break below support at $1.1072 would signal a potential reversal and invite selling pressure toward the $1.1049 and $1.1017 levels. While the broader trend remains bullish, traders should monitor overbought signals and key support levels closely.
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EUR/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- EUR/USD faces resistance at $1.1125, with the RSI at 73, signaling overbought conditions.
- Key support levels are at $1.1072 and $1.1049, with the 50-day EMA at $1.1050 providing critical support.
- A break above $1.1125 could drive further gains, but caution is advised as the RSI suggests potential for a near-term pullback.
EUR/USD is trading at $1.11187, up 0.21% as the pair continues its upward trajectory, reflecting strong bullish sentiment. Immediate resistance lies at $1.1125, followed by $1.1151 and $1.1185.
The pair remains supported above its pivot point at $1.1101, signaling potential for further upside. However, with the Relative Strength Index (RSI) reaching 73, overbought conditions suggest that a short-term pullback may be on the horizon.
On the downside, immediate support is seen at $1.1072, followed by $1.1049 and deeper support at $1.1017. The 50-day Exponential Moving Average (EMA) at $1.1050 provides a key level of support, reinforcing the overall bullish trend.
A sustained move above $1.1125 would solidify the upward momentum, though traders should be cautious given the elevated RSI.
Traders are looking to enter above $1.11126 with a take-profit target at $1.11446, positioning the pair for a test of higher resistance.
However, a break below support at $1.1072 would signal a potential reversal and invite selling pressure toward the $1.1049 and $1.1017 levels.
While the broader trend remains bullish, traders should monitor overbought signals and key support levels closely.
EUR/USD - Trade Ideas
Entry Price – Buy Above 1.11126
Take Profit – 1.11446
Stop Loss – 1.10829
Risk to Reward – 1: 1.08
Profit & Loss Per Standard Lot = +$320/ -$297
Profit & Loss Per Mini Lot = +$32/ -$29
EUR/USD Price Analysis – Sep 13, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its upward momentum, climbing to 1.1101. This rise is attributed to the Euro (EUR) gaining strength after the European Central Bank (ECB) announced its monetary policy on Thursday.
ECB policymaker Madis Muller’s remarks about growing confidence in inflation control and a moderate economic recovery could boost the EUR. However, concerns over services inflation and temporary inflation spikes may temper gains.
Moreover, the US Dollar (USD) weakened following weaker-than-expected US Producer Price Index (PPI) data for August.
US Dollar Weakens as Fed Rate Cut Speculation Grows, Boosting EUR/USD
On the US front, the broad-based US dollar is facing significant selling pressure. This shift comes as market speculation grows that the Federal Reserve (Fed) might cut interest rates by 50 basis points (bps) at its upcoming meeting on Wednesday.
The probability of this rate cut, as shown by the CME FedWatch tool, has surged to 43% from just 14% following the release of the US Producer Price Index (PPI) data.
On the data front, the PPI report showed that producer inflation increased by 1.7% year-over-year in August, falling short of the expected 1.8% and down from 2.1% in July. Core producer inflation, excluding food and energy prices, rose by 2.4%, missing the forecast of 2.5%.
This slower rate of price increase suggests weak consumer spending, which often boosts expectations that the Fed might lower interest rates.
Hence, the weaker-than-expected US PPI data and growing speculation of a Fed rate cut have led to a stronger Euro (EUR) against the US Dollar (USD). This boosts the EUR/USD pair as traders anticipate a more dovish Fed stance.
EUR/USD Rebounds Despite Weaker Eurozone Industrial Data and Cautious ECB Rate Adjustments
On the EUR front, the Eurozone's industrial sector faced a deeper decline in July, with industrial output dropping by 0.3% month-over-month, matching expectations but worse than June's flat reading. Annually, industrial production fell by 2.2%, an improvement from June's 4.1% drop but still worse than the forecasted 2.7%.
Despite these weak numbers, ECB policymaker Madis Muller expressed growing confidence that inflation is heading in the right direction, though he noted concerns about services inflation and expected a moderate recovery for the Eurozone economy.
Following the European Central Bank (ECB) meeting, the EUR/USD pair rebounded to 1.1100. The ECB cut the deposit facility rate by 25 basis points to 3.50% and adjusted other rates to help support lending and the economy. Although the ECB lowered its growth forecasts for the Eurozone, it expects inflation to pick up again in the fourth quarter of 2024. The ECB did not signal another rate cut for its October meeting, maintaining a cautious approach based on economic data.
Consequently, the weaker Eurozone industrial data and ECB’s cautious rate adjustments initially pressured the EUR/USD pair. However, the EUR/USD rebounded to 1.1100, as the ECB's rate cut and inflation expectations supported the Euro, countering the negative impact.
EUR/USD- Technical Analysis
The EUR/USD pair is trading at $1.10846, up a modest 0.10%, as the currency pair hovers around key technical levels. The recent uptick in price signals bullish momentum, but caution is warranted with the Relative Strength Index (RSI) sitting at 63, nearing overbought territory.
This suggests potential limited upside in the near term, with market participants eyeing key resistance and support levels for further guidance.
The pivot point is located at $1.1090, which serves as a critical reference for intraday price movements. Immediate resistance is seen at $1.1121, followed by stronger levels at $1.1151 and $1.1185.
A decisive break above these levels could signal the continuation of the bullish trend, potentially triggering further gains toward the $1.12 mark. However, with the RSI approaching higher levels, the currency may face headwinds if buying pressure wanes.
On the downside, immediate support rests at $1.1066, with further support at $1.1041 and $1.1006.
The 50-day Exponential Moving Average (EMA), currently at $1.1058, aligns closely with the support zone, acting as a key level to watch for a potential retracement. Any sustained break below these levels could shift market sentiment towards a bearish outlook.
Strategically, selling below $1.1090 may be favorable, with a target of $1.1040. A stop-loss at $1.1120 would provide appropriate risk management, particularly as the pair tests its immediate resistance levels.
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