Technical Analysis

EUR/USD Price Analysis – May 01, 2024

By LonghornFX Technical Analysis
May 1, 20243 min

Daily Price Outlook

Despite previously released upbeat Eurozone data, the EUR/USD currency pair failed to gain positive momentum and remained bearish around the 1.0663 level, hitting an intraday low of 1.0649.

However, the declining streak can be attributed to multiple factors, including a bullish US dollar and a dovish stance from the European Central Bank (ECB) regarding interest rate cuts. In contrast, Eurozone GDP growth surpassed forecasts, increasing by 0.3% in Q1.

This indicates stronger-than-anticipated economic expansion within the Eurozone during the period, which was seen as one of the key factors helping the EUR/USD pair to limit its downward trend.

US Dollar Strengthens on Upbeat Economic Data and Hawkish Fed Comments

On the US front, the broad-based US dollar gained traction on the back of better-than-expected Employment Cost Index data. Furthermore, the upticks in the US dollar were further bolstered by the comments from Fed officials, suggesting no urgent need for rate cuts.

On the data front, the US Employment Cost Index rose by 1.2%, marking its biggest increase in a year, surpassing both the expected 1.0% and the previous 0.9%. This indicates that the persisting wage pressures might intensify the impact of ongoing inflation in the US economy.

Therefore, the US dollar gained strength against the Euro due to positive US data and hawkish Fed comments. Moving ahead, traders are expected to closely watch the release of the ADP Employment Change and ISM Manufacturing PMI from the US on Wednesday, just before the Fed's Monetary Policy Statement.

Eurozone Economic Indicators Support Potential Euro Strength

On the EUR front, Eurozone GDP grew by a better-than-expected 0.3% in Q1. Furthermore, the Harmonized Index of Consumer Prices (HICP) saw steady year-over-year growth, meeting forecasts, while core HICP, excluding food and energy prices, softened but still surpassed estimates.

However, the Eurozone's stronger-than-expected Q1 GDP growth and steady HICP inflation figures, despite a slight softening in core HICP, could bolster the euro against the US dollar.

Hence, the Eurozone's robust Q1 GDP growth and steady inflation figures could strengthen the euro against the US dollar, driving the EUR/USD pair higher.

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

EUR/USD - Technical Analysis

In today's session, the EUR/USD pair is slightly down, trading at $1.06630, a decrease of 0.04%. This minor downtick reflects a cautious market posture ahead of key economic releases. Positioned just below its pivotal point at $1.06871, the pair’s movements suggest a hovering uncertainty among traders.

Resistance for EUR/USD is initially found at $1.06889, with further ceilings at $1.07204 and $1.07534 that need to be surpassed for significant bullish momentum. On the downside, the immediate support lies at $1.06322, extending to $1.06018 and $1.05627, which serve as crucial buffers against potential declines.

The Relative Strength Index (RSI) stands at 39, indicating a slight lean towards oversold conditions, which could foretell a potential for recovery if market conditions permit. Additionally, the 50-Day Exponential Moving Average (EMA) aligns closely at $1.06887, underscoring a pivotal role in short-term price direction.

Given the proximity of the current price to critical technical levels, adopting a cautious approach may be wise. An ideal trading strategy would be to initiate a buy position slightly above the current market price at $1.06562, targeting the pivot point at $1.06871 for potential profit-taking, and placing a stop loss at $1.06258 to manage risks effectively.

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