Technical Analysis

EUR/USD Price Analysis – March 29, 2024

By LonghornFX Technical Analysis
Mar 29, 20243 min

Daily Price Outlook

During the European trading session, the EUR/USD currency pair has been experiencing a downward trend for the fourth consecutive day and remained well-offered around the 1.0775 level. However, this decline can be attributed to several factors, including the bullish US Dollar, which has strengthened, nearing 104.60, driven by hawkish statements from a Federal Reserve (Fed) official. Fed Governor Christopher Waller hinted at a potential delay in interest rate cuts, buoyed by strong inflation figures.

Moreover, recent robust economic indicators from the United States, including a better-than-expected expansion of 3.4% in the US Gross Domestic Product (GDP) annualized for the fourth quarter of 2023, have further bolstered the US dollar position.

Impact of Hawkish Sentiment Surrounding the US Fed:

On the US front, the hawkish sentiment surrounding the US Federal Reserve has underpinned the US dollar and has exerted further pressure on the EUR/USD pair. Waller's comments, suggesting a potential delay in interest rate cuts due to stronger inflation figures, have instilled confidence in the US dollar, leading to its appreciation against the euro.

Investors are awaiting the US Personal Consumption Expenditures (PCE) report, which serves as the Fed’s preferred inflation gauge, to gain further clarity on the monetary policy trajectory. This anticipation has fueled market expectations of higher interest rates in the US, boosting the dollar and contributing the losses in the EUR/USD pair.

Impact of Dovish Remarks from ECB Policymaker Francois Villeroy:

On the Euro front, the dovish remarks from European Central Bank (ECB) policymaker Francois Villeroy have put further downward pressure on the EUR/USD pair. Villeroy said core inflation dropped fast but is still high. He thinks the ECB can reach its 2% inflation goal but warns of risks if they don't cut rates. Moreover, Fabio Panetta from the ECB is worried that strict rules are making people spend less, which is making inflation drop fast.

These dovish remarks have underscored market expectations of potential monetary easing by the ECB, contrasting with the hawkish stance of the Fed, further weighing on the euro and contributing to the bearish performance of the EUR/USD pair.

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

EUR/USD - Technical Analysis

On March 29, the EUR/USD pair saw a slight decline, closing at 1.07752, down by 0.10%. This movement places the currency pair just below the pivotal mark of 1.08037, signaling potential shifts in market dynamics. Immediate resistance levels are identified at 1.08396, 1.08656, and 1.08937, indicating upper boundaries that may cap upward trends. On the downside, support is found at 1.07647, with further cushions at 1.07334 and 1.06948, suggesting areas where buying pressure could intensify.

The technical indicators portray a more nuanced picture. With an RSI of 32, the EUR/USD is nearing oversold territory, hinting at a potential rebound or stabilization. However, the 50-day Exponential Moving Average (EMA) at 1.08389 stands above the current price, reflecting a bearish sentiment over the medium term.

Considering these technical parameters, the outlook for EUR/USD seems tilted towards bearishness in the short term. Traders might consider selling below 1.07904, with a take-profit target set at 1.07368 and a stop-loss at 1.08254.

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