Technical Analysis

EUR/USD Price Analysis – March 27, 2024

By LonghornFX Technical Analysis
Mar 27, 20243 min

Daily Price Outlook

During the European trading session, the EUR/USD currency pair failed to stop its downward trend and remained well offered around the 1.0825 level. However, the downward trend in the EUR/USD pair was driven by renewed strength in the US Dollar. Furthermore, the growing expectations of a June rate cut by the ECB, and lackluster economic data from the Eurozone, were seen as other key factors that kept the EUR/USD currency pair under pressure.

The downward performance of the EUR/USD pair is due to growing speculation of a June rate cut by the European Central Bank (ECB). This sentiment has been fueled by statements from ECB policymakers indicating a willingness to consider rate cuts. Such remarks, particularly from officials like Madis Muller and Yannis Stournaras, have undermined confidence in the euro, leading investors to sell off the currency.

Moreover, the euro is facing more challenges as economic data from the Eurozone disappoints, making investors less confident in the currency. They are worried about the ECB possibly making monetary policy looser due to uncertain economic conditions. This uncertainty is causing the euro to lose value compared to the US dollar.

ECB Rate Cut Expectations Weaken Euro and Drive EUR/USD Downward

On the Euro front, the prospects of a June rate cut by the ECB have significantly undermined the euro, contributing the losses in the EUR/USD pair. However, the increasing likelihood of monetary policy easing by the ECB has led investors to favor the USD over the euro. Meanwhile, the statements from ECB policymakers suggesting a June rate cut have fueled expectations, leading investors to anticipate a narrower interest rate gap between the euro and the USD, contributing to euro weakness. Consequently, the prospects of a June rate cut by the ECB have undermined the euro, contributing to losses in the EUR/USD pair.

USD Index Strengthens on Positive Economic Data and Fed Expectations

On the US front, the broad-based US dollar has maintained its upward tone and climbed back closer to a multi-week high, buoyed by optimism surrounding the US economy. However, the positive economic data, such as the slightly better-than-expected US Durable Goods Orders release, has reinforced the view of a robust economic outlook. The expectation of the Federal Reserve (Fed) maintaining higher interest rates for a prolonged period to combat inflationary pressures has further bolstered the USD. Therefore, the strong US dollar, supported by optimism in the US economy and expectations of sustained high interest rates from the Fed, has exerted upward pressure on the EUR/USD pair.

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

EUR/USD - Technical Analysis

The EUR/USD pair exhibited a slight decrease today, shedding 0.04% to close at 1.08281. This subtle move reflects the market's ongoing consolidation phase, where investors gauge the strength of underlying economic signals from the Eurozone and the United States. The currency pair's journey is particularly influenced by its positioning relative to the pivot point at 1.0804, which acts as a critical juncture for determining its short-term trajectory.

Resistance markers identified at 1.0886, 1.0917, and 1.0964 serve as potential barriers to upward movements. These levels could provoke selling pressures, reinforcing the currency pair's cautious outlook. On the downside, support at 1.0803, followed by 1.0765 and 1.0733, suggests key areas where buyers could emerge, providing a buffer against further declines.

The trading scenario is compounded by technical indicators such as the RSI at 43, hinting at a leaning towards oversold conditions, and the 50-day EMA at 1.0855, currently acting as resistance. The presence of a bearish engulfing candlestick pattern below the 1.0850 level further substantiates the bearish sentiment.

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