Technical Analysis

EUR/USD Price Analysis – Feb 14, 2024

By LonghornFX Technical Analysis
Feb 14, 20244 min

Daily Price Outlook 

The EUR/USD currency pair managed to recover its losses and gained some positive traction despite the bullish US dollar, which was backed by the release of strong US CPI data. However, the upticks in the EUR/USD pair appeared after the release of better-than-expected Economic Sentiment data from both the Eurozone and Germany on Tuesday.

This has lend some support to the shared currency to recover its gains. In contrast to this, the Eurozone's GDP data for the fourth quarter met market expectations, which weakened the Euro and stopped the EUR/USD pair from rising further.

Impact of Eurozone Economic Data and ECB Comments on the EUR/USD Pair

It's worth noting that the shared currency received some support after the release of upbeat Economic Sentiment data from the Eurozone and Germany on Tuesday. ECB Vice President Luis de Guindos highlighted persistent wage pressures despite some signs of improvement. Meanwhile, the preliminary Eurozone GDP maintained a stable growth rate of 0.1% year-over-year in Q4, meeting expectations. Quarter-over-quarter, Eurozone GDP showed no change at 0.0%, consistent with the previous quarter.

On the negative side, the seasonally adjusted Eurozone Gross Domestic Product (GDP) data aligned with market expectations for the fourth quarter, putting downward pressure on the Euro and subsequently impacting the EUR/USD pair. This is because it indicates that the economy is performing as anticipated, without any significant surprises.

Investors are keeping their eyes on the release of preliminary Gross Domestic Product (GDP) data. Besides this, all ears are on a speech by Christine Lagarde, the ECB President, scheduled for Thursday.

Impact of Higher US Inflation on the USD and EUR/USD Pair

The broad-based US dollar received a boost from higher-than-expected inflation, favoring no interest rate cut by the Federal Reserve in March. This strengthened the US dollar against the EUR. This can be witnessed by the performance of DXY, which reaching 104.90 despite lower US Treasury yields. At the data front, the US headline Consumer Price Index (CPI) rose by 3.1%, exceeding expectations of 2.9% but below the previous rate of 3.4%.

US inflation increased by 0.3% MoM, against the expected 0.2%. US Core CPI (YoY) remained steady at 3.9%, defying market expectations of a decline to 3.7% in January. US Core Inflation (MoM) rose by 0.4%, surpassing the expected unchanged reading of 0.3% in January. The 2-year and 10-year US Treasury yields stood at 4.60% and 4.29% respectively.

Therefore, the news of higher US inflation and lowered probability of a Fed rate hike strengthened USD, leading to a decline in EUR/USD pair.

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

EUR/USD - Technical Analysis

On February 14, the EUR/USD pair steadied, marking an unchanged position at 1.07082, signifying a moment of equilibrium in the forex markets amidst varying economic signals from both sides of the Atlantic.

Currently, the pair finds itself just above the pivot point at 1.07005, indicating a slight bullish inclination. Immediate resistance levels are identified at 1.07221, followed by 1.07369 and 1.07586, which the pair needs to surpass to confirm a stronger upward momentum. On the downside, support levels are established at 1.06730, 1.06503, and further down at 1.06257, providing potential floors to cushion any downward movements.

The Relative Strength Index (RSI) stands at 37, pointing towards a leaning but not fully entered into the oversold territory. This, coupled with the 50-day Exponential Moving Average (EMA) positioned at 1.07628, slightly above the current price, suggests a cautious market sentiment with a lean towards potential upside.

Given these technical insights, a strategic approach would be to set a buy limit at 1.07001, aiming for a take profit at 1.07486, while placing a stop loss at 1.06719. This trading strategy capitalizes on the EUR/USD's current stability and anticipates a modest rebound towards the identified resistance levels.

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