Technical Analysis

EUR/USD Price Analysis – April 22, 2024

By LonghornFX Technical Analysis
Apr 22, 20243 min

Daily Price Outlook

During the European trading session, the EUR/USD currency pair continued its downward trend, reaching an intra-day low of 1.0647. This trend was influenced by dovish statements from ECB officials like François Villeroy de Galhau and Joachim Nagel, indicating a readiness to adjust monetary policies to support economic stability and growth. Additionally, bullish sentiment toward the US dollar contributed to the pressure on EUR/USD.

Investors are closely watching the preliminary Eurozone HCOB PMI for April this Tuesday, followed by the final reading of the US March Personal Consumption Expenditures Price Index (PCE) on Friday. These key economic indicators will provide insights into both Eurozone and US economic conditions, influencing market sentiments.

Impact of Mixed ECB Opinions on EUR/USD Amid Economic Uncertainties

On the EUR front, the European Central Bank (ECB) is expected to keep rates steady in June unless there's a major shock. However, there are mixed opinions among ECB officials. Governor François Villeroy de Galhau leans towards a rate cut in June that could protect the eurozone economy. President Joachim Nagel acknowledges the growing possibility of a rate cut. Madis Muller advises against sudden cuts post-June, while Robert Holzmann raises concerns about geopolitical tensions.

Therefore, the mixed opinions among ECB officials regarding rate cuts have led to cautious expectations, influencing the EUR/USD currency pair with a slight bias towards stability amidst economic uncertainties and geopolitical risks.

Impact of Hawkish Federal Reserve and Geopolitical Tensions on the EUR/USD Pair

On the US front, the broad-based US dollar has been gaining momentum and remains well-supported by hawkish remarks from the Federal Reserve (Fed), particularly those indicating a reluctance to cut rates until year-end. This stance, reinforced by Chicago Fed President Austan Goolsbee's view that inflation progress has "stalled" and that current policy is appropriate, boosts confidence in the dollar. Furthermore, ongoing geopolitical tensions in the Middle East add to the dollar's appeal as a safe haven, creating a positive outlook for the US dollar against its rivals.

Therefore, the hawkish stance of the Federal Reserve, along with geopolitical tensions, is bolstering the US dollar and creating a positive outlook. This is likely to exert downward pressure on the EUR/USD pair.

EUR/USD Price Chart - Source: Tradingview
EUR/USD Price Chart - Source: Tradingview

EUR/USD - Technical Analysis

In today's trading session, the EUR/USD pair showed modest gains, increasing by 0.10% to a trading value of $1.06621. The currency pair is navigating around a pivot point at $1.0669, which serves as a vital marker for the intraday trading strategy.

The EUR/USD pair confronts immediate resistance at $1.0710. Should bullish momentum persist, the next targets for resistance are positioned at $1.0744 and $1.0776, respectively. These levels could act as significant barriers where potential selling pressure might emerge. On the flip side, the currency pair finds strong support at $1.0603, with additional support seen at $1.0557 and $1.0502. These support levels are crucial for traders watching for rebound opportunities or further declines.

The Relative Strength Index (RSI) is currently at 51, indicating a neutral market momentum, neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) at $1.0674 slightly above the current price, suggests that the EUR/USD is testing critical support levels. A sustained move below the 50 EMA could signal a bearish trend.

Considering the technical setup, a strategic entry for selling the EUR/USD might be positioned just below the 50 EMA at $1.06756, targeting a drop towards the first support at $1.06068. The stop loss for this position could be set at $1.07392 to mitigate risk in case of a reversal above the near-term resistance levels.

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