Technical Analysis

EUR/USD Price Analysis – May 15, 2023

By LonghornFX Technical Analysis
May 15, 20233 min

Daily Price Outlook

The EUR/USD has seen some early-week strength after establishing support at the important 1.0840 level. But last week, as the US Dollar strengthened and market mood deteriorated, the pair came under selling pressure.

The European Central Bank (ECB) had contradictory statements over the weekend. The European Central Bank's Vice President Luis De Guindos said recently that the ECB is reaching the conclusion of its tightening cycle, while another policymaker, Kazimir, adopted a more hawkish stance, emphasising the necessity for a longer duration of rate hikes to counteract inflationary pressures.

This disagreement highlights the randomness with which policymakers must arrive at the best course of action for monetary policy. greater inflation projections for 2023 and doubts about the viability of greater growth in the second half of the year are both a reflection of this uncertainty in the EU Commission Forecast.

The industrial output in the Eurozone dropped sharply in March, down 4.1% from February. Computer, electrical, and optical device manufacturing in Ireland plummeted, contributing to the country's economic downturn. Important Eurozone economies, such as Germany's, also saw manufacturing drop down. The most recent report on new orders in the Eurozone doesn't do much to ease worries about demand.

The strength of the US Dollar, diverging opinions on ECB policy, and economic statistics showing slowing industrial production and falling demand all continue to have an impact on the EUR/USD exchange rate.

 EUR/USD Price Chart - Source: Tradingview

EUR/USD – Technical Outlook

The EUR/USD pair concluded last Friday beneath the 1.0865 mark, further solidifying the ongoing dominance of bearish correction, and setting the stage for a potential decline towards the 1.0795 target.

The 50-day Exponential Moving Average (EMA50) exerts persistent downward pressure on the price, thereby supporting the anticipated continuation of the bearish trend. However, some sideways movement influenced by positive stochastic indicators could occur, awaiting a negative catalyst to push the price towards the anticipated target.

Consequently, our forecast remains bearish for the foreseeable future. It's important to note that a breach of the 1.0865 mark, followed by the 1.0880 level, could disrupt the bearish wave and prompt the price to attempt to resume the primary bullish trend.

The projected trading range for today lies between a support level of 1.0770 and a resistance level of 1.0920.


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