Technical Analysis

EUR/USD Analysis – February 21, 2023

By LonghornFX Technical Analysis
Feb 21, 20233 min

Daily Price Outlook

The EUR/USD currency pair is currently trading at $1.0665, reflecting a decline of 0.16% in the last 24 hours. Contrary to the common narrative of Eurozone weakness, the recent decline in the pair can be attributed to the strength of the US dollar over the past few weeks.

Eurozone PMI  in Highlights

The EUR/USD is expected to have a busy day as investors focus on the preliminary private sector PMIs for France, Germany, and the Eurozone for February.

The flash PMI figures, set to be released on Tuesday, February 21, will be closely watched as they will provide insights into the current state of the Eurozone economy, which unexpectedly expanded in the last quarter of 2022.

According to analysts, the Manufacturing PMI for February is expected to rise to 49.4, up from the previous reading of 48.8. Additionally, the Services PMI is anticipated to increase from 50.8 to 51.0, and a better-than-expected PMI result could benefit the Euro.

Investors are also anticipating a 50 basis point increase in the ECB interest rate in March. Positive PMI results may increase market anticipation and reduce monetary policy divergence, which could be beneficial for the ECB.

Anticipation Builds as Market Awaits Today's US PMI Report

Today, the February Purchasing Managers Index (PMI) for the United States is set to release. Traders are eagerly waiting for the data to be released. As per the consensus, the Services PMI is expected to come in at 47.3, which is higher than the previous reading of 46.8.

The PMI statistics are likely to have an impact on the Dollar, and there is a possibility that the US Dollar may continue to strengthen.

US Interest Rates: Their Impact on the Economy

The US Federal Reserve expressed its concern about inflation and increased interest rates a few weeks ago. Traders need to be cautious and keep an eye on the GDP data from the United States on Thursday, February 23, as this report's result may trigger volatility.

Last week's US retail sales data was also stronger than expected. If this week's GDP growth estimates are also high, the US Fed could use this data as a reason to continue raising interest rates.

The EUR/USD pair could experience more bearish selling if the US central bank raises interest rates by another 0.50% to 0.75%. However, a weaker-than-expected US GDP reading might support market sentiment and lead to a positive movement for the EUR/USD.

 EUR/USD Price Chart - Source: Tradingview

EUR/USD Intraday Technical Levels

Support      Resistance

1.0668         1.0701

1.0653         1.0719

1.0634         1.0734

Pivot Point: 1.0686

EUR/USD – Technical Outlook

Yesterday, the EUR/USD pair traded in a narrow range of 1.0660 to 1.0700 and remained relatively stable due to the US holidays. The price settled below the 50-day exponential moving average (EMA), creating negative pressure and indicating the possibility of a continued downward trend toward the target level of 1.0515.

Therefore, the bearish scenario is still valid on an intraday basis, and any bullish movement would require a break above the 1.0745 resistance level. Until then, the negative trend is dominating the market.

For today, the EUR/USD pair's trading range is between support at 1.0570 and resistance at 1.0725. The US FOMC meeting minutes will remain in highlights to drive further price action in the market.


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