Technical Analysis

EUR/USD Price Analysis – Oct 27, 2023

By LonghornFX Technical Analysis
Oct 27, 20233 min

Daily Price Outlook

The EUR/USD currency pair continued its downward slide and remained under pressure around the 1.0550 level on Friday. However, this bearish trend can be attributed to the strength of the US dollar. The Greenback is maintaining its position near 106.70 when assessed by the USD Index (DXY), remaining towards the higher end of the weekly range. Notably, the modest increase in the US dollar was backed by an uptick in U.S. yields. Furthermore, geopolitical tensions in the Middle East have played a significant role in bolstering the US dollar and have added to the losses in the EUR/USD pair.

Federal Reserve Monetary Policy and USD Strength

Moreover, a growing consensus has emerged among market participants that the Federal Reserve (Fed) will maintain its current stance of keeping interest rates unchanged at the meeting on November 1. However, the possibility of a rate hike in December remains on the table, supported by the strength of the US economy and the persistently high levels of inflation. This, in turn, has kept the US dollar strong and has contributed to the losses in the EUR/USD currency pair.

Central Bank Actions and Upcoming Economic Data

It's worth noting that the European Central Bank (ECB) didn't deliver any surprises during their recent event on Thursday. They unanimously decided to maintain the current policies. The President of the ECB, Christine Lagarde, reiterated the need for further efforts to combat inflation. They expect inflation to remain at elevated levels for an extended period. Adding a pessimistic tone to the meeting, Lagarde also acknowledged that the risks to the economic outlook are leaning towards the downside.

Looking ahead, the ECB will soon publish its Survey of Professional Forecasters (SPF). In the United States, a key event to keep an eye on is the release of inflation data, specifically the Personal Consumption Expenditures (PCE) Price Index and Core PCE for September.

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

EUR/USD - Technical Analysis

As the world keeps a close eye on major currency movements, the EUR/USD pair, a critical metric in the global forex market, has been under the lens. On October 27, the pair was trading at 1.05652, seeing a marginal rise of 0.04% within the 24-hour window. This analysis is based on a 4-hour chart that provides investors with a snapshot of the currency duo's intraday fluctuations.

The pivot point for the day rests at 1.0578. On the upside, traders should be cautious of resistance levels positioned at 1.0610, 1.0645, and 1.0682. Conversely, should the pair take a downward turn, it will likely find support at 1.0524, 1.0491, and further down at 1.0454.

The Relative Strength Index (RSI) stands at 46, illustrating a bearish sentiment. Though not drastically bearish, an RSI below 50 does hint at the prevailing bearish mood among traders. Furthermore, the price's proximity to the 50-Day Exponential Moving Average (50 EMA) at 1.0577 suggests a tense equilibrium. The currency pair is treading just below this average, hinting at a short-term bearish trend.

While we haven't pinpointed any specific chart patterns for the day, these often hold the key to predicting future movements. For example, patterns like the Symmetrical Triangle or an upward channel can provide insights into potential bullish or bearish momentum.

As of now, the overall trend for the EUR/USD seems bearish, especially given its current stance below the crucial 1.05763 mark. However, any shift above this point could flip the sentiment. In the near future, we can anticipate the pair to potentially test the immediate resistance of 1.0610. With every tick and transaction, the forex market is continually evolving, making it imperative for traders to stay updated and adjust their strategies accordingly. 

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