Technical Analysis

EUR/USD Price Analysis – May 17, 2024

By LonghornFX Technical Analysis
May 17, 20243 min

Daily Price Outlook

During the European trading session, the EUR/USD currency pair has been experiencing a bearish trend and dropped below 1.0900. This downward movement is mainly attributed to the rebound of the US dollar.

The Greenback has been gaining strength after several Federal Reserve (Fed) officials expressed their commitment to maintaining interest rates at their current levels for a longer period.

This stance indicates a more restrictive monetary policy, which tends to bolster the US Dollar and contributed to the EUR/USD pair losses. Traders and investors will closely monitor further developments in monetary policy and economic indicators for clues on the future direction of the currency pair.

Fed's Hawkish Stance Boosts US Dollar, Drives EUR/USD Losses

On the US front, the US dollar regained its lost traction and the bullish run can be attributed to the hawkish statements made by Fed policymakers. They emphasized the need to keep interest rates steady, indicating a more hawkish stance on monetary policy.

Despite one positive inflation report, the Fed remains cautious about the possibility of rate cuts. This sentiment has led to a rebound in the US Dollar and contributed to the EUR/USD pair losses.

Schnabel's Cautionary Remarks Exert Downward Pressure on EUR/USD

Another factor that has been putting pressure on the EUR/USD pair is the European Central Bank (ECB) Board member Isabel Schnabel's comments. She warned against premature interest-rate cuts, suggesting a cautious approach beyond the anticipated June rate cut.

Schnabel highlighted the challenges in the final stages of disinflation and the potential inflation risks of cutting rates too soon.

Schnabel's cautionary remarks add downward pressure on EUR/USD, signaling uncertainty about extending rate cuts beyond June due to disinflation challenges and inflation risks from premature easing.

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

EUR/USD - Technical Analysis

EUR/USD is trading at $1.08626, down 0.04% for the day, reflecting a modest decline in the pair. The 4-hour chart highlights a pivot point at $1.08544, serving as a critical level of support.

Immediate resistance is identified at $1.08754, followed by $1.08951 and $1.09132. These resistance levels are pivotal for any potential bullish momentum, as breaking above them could signal further gains.

On the downside, immediate support is seen at $1.08408, with further support levels at $1.08223 and $1.07966. These support levels are crucial for maintaining the current trend, as a break below them could indicate a shift towards a bearish outlook.

The 50-day Exponential Moving Average (EMA) at $1.08325 provides additional support, aligning closely with the current price and suggesting a stabilization point.

The Relative Strength Index (RSI) is currently at 56, indicating a balanced market with moderate bullish momentum. An RSI above 50 typically suggests a positive trend, though the level of 56 indicates that there is still room for upward movement without entering overbought territory.

The recent price action in EUR/USD shows a pattern of consolidation around the pivot point, suggesting indecision among traders. The pair's ability to stay above the pivot point of $1.08544 is crucial for a sustained bullish trend.

However, the presence of strong resistance levels nearby indicates that significant upward movement may face challenges.

In conclusion, the technical outlook for EUR/USD remains cautiously bullish above the pivot point of $1.08544. An entry price for selling is recommended below $1.08544, with a take profit target at $1.08223 and a stop loss at $1.08951.

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