Technical Analysis

EUR/USD Price Analysis – June 28, 2024

By LonghornFX Technical Analysis
Jun 28, 20244 min

Daily Price Outlook

During the European trading session, the EUR/USD currency pair continued its mild bullish trend and remained well bid around the 1.0707 level, hitting an intraday high of 1.0711. The mild upward trend was attributed to renewed selling pressure in the US dollar, which lost some of its gains on the back of softer macroeconomic data published on Thursday.

This has increased expectations for the Federal Reserve to begin cutting rates soon. On the flip side, the downbeat European data released on Thursday tends to undermine the shared currency and could cap further gains in the EUR/USD pair.

Impact of Eurozone Economic Data on the EUR/USD Pair

On the EUR front, recent data showed a slight softening as the pan-EU Economic Sentiment Indicator fell to 95.9 from 96.0, missing expectations of a rise to 96.2. Looking ahead, Friday’s German unemployment figures are anticipated to reveal a decrease in new jobless benefit seekers to 15,000 in June, down from 25,000 previously.

The seasonally-adjusted unemployment rate for June is expected to remain unchanged at 5.9%. These indicators suggest a cautious economic outlook in the Eurozone, influenced by ongoing challenges and cautious labor market conditions in Germany specifically.

Therefore, the softer economic data from the Eurozone, particularly in Germany, could weigh on the EUR/USD pair, reflecting cautious sentiment and potential concerns about economic recovery and stability in the region.

Impact on EUR/USD Pair Amid US Economic Developments and Fed Commentary

On the US front, the US dollar has been showing signs of weakness and continues to be under pressure following the release of recent disappointing economic data. This has heightened expectations that the Federal Reserve will start the Federal Reserve's rate-cutting cycle this year.

Meanwhile, comments by Fed Governor Michelle Bowman indicate a cautious stance on rate cuts due to upside risks to inflation.

On the data front, US economic indicators showed mixed results with Initial Jobless Claims for the week ending June 21 coming in better than expected at 233,000 new claims, below the forecast of 236,000 and down from the previous week’s 238,000.

However, the four-week average edged up to 236,000, although the latest week’s figure remained below this average.

Meanwhile, US Gross Domestic Product (GDP) for Q1 met expectations, revised slightly higher to 1.4% from the initial 1.3%. Core Personal Consumption Expenditures in Q1 also saw a slight increase, rising to 3.7% quarter-on-quarter compared to the expected 3.6%.

Therefore, the US dollar's weakness, fueled by disappointing economic data and expectations of Federal Reserve policy easing, could bolster the EUR/USD pair. However, cautious Fed comments on inflation risks may temper any significant euro gains against the dollar.

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

EUR/USD - Technical Analysis

The EUR/USD pair is trading at $1.06972, down 0.16% on the day. The 4-hour chart highlights critical price levels, with the pivot point set at $1.0700. Immediate resistance is located at $1.0713, followed by $1.0727 and $1.0745. On the downside, immediate support is found at $1.0686, with further support levels at $1.0671 and $1.0655.

The Relative Strength Index (RSI) is currently at 48, indicating neutral momentum and suggesting that the market is neither overbought nor oversold. The 50-day Exponential Moving Average (EMA) is at $1.0707, acting as a key resistance level. The EUR/USD needs to break above this level to indicate further bullish momentum.

Traders should consider selling positions below the pivot point of $1.0700, with a target of the first support level at $1.06725. A break below this level could pave the way for further declines towards $1.0671 and $1.0655. Conversely, if the pair moves above the immediate resistance at $1.0713, it could target the next resistance levels at $1.0727 and $1.0745.

In summary, while EUR/USD is experiencing a slight downturn, the overall outlook remains bearish below the pivot point of $1.0700.

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