The EURUSD pair trades around $1.076, bouncing back from a three-month low on mixed signals regarding monetary policy stances from both the ECB and the Fed. Cautious optimism prevails, with investors weighing data-driven insights and policymakers’ commentary.
While acknowledging progress in taming inflation, ECB President Lagarde reiterated the need for further evidence, particularly wage trends, before considering rate cuts. This cautious approach somewhat tempers hawkish expectations, leaving the timing of potential easing unclear.
Upcoming US data releases, including Core PPI and Consumer Sentiment, hold the key to gauging the Fed’s rate cut trajectory. Core PPI is expected to remain subdued at 0.1%, reflecting potential moderation in inflationary pressures. However, a stronger-than-anticipated reading could reignite hawkish bets and dampen EURUSD sentiment.
Technical Analysis:
The 4-hour chart shows that the price action trades within a descending channel pattern, currently slightly above the lower trendline. A recent break above the 20-SMA (green line) and 50-SMA (blue line) hints at bullish momentum, but resistance from the 100-SMA (orange line) remains.
Short-term trading opportunities could arise towards the 1.08005 resistance level should the price sustain a push above the 100-SMA. A successful break above the 1.08005 level would likely bring the 1.08631 resistance level into play in the short term.
However, short-term trading opportunities could exist towards the 1.07271 support level should the price action fail to sustain a push above the shorter-term SMAs. A break below the initial support, with significant volume, could confirm the bearish momentum, likely bringing the last swing low of 1.06957 into play.
Summary
The EURUSD pair navigates a complex landscape of mixed monetary policy signals and economic data. While the ECB adopts a cautious approach, the Fed’s stance remains unclear. Technically, the pair trades within a descending channel, with key support and resistance levels offering potential trading opportunities. Upside potential exists if the price breaks above the 100-SMA and 1.08005, while downside risks emerge if support at 1.07271 crumbles.
Sources: TradingView, Trading Economics, Dow Jones Newswire, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
