Amidst a dynamic week in the forex market, the EURUSD currency pair has witnessed a downturn following a prior week of gains.
Down by four basis points this week, its trajectory is notably influenced by key economic indicators on both sides of the Atlantic. Flash estimate data revealing a slight easing in Eurozone inflation to 2.6% in February, despite remaining above forecasts, marks the second consecutive month of moderation. Eurozone policymakers have adopted a cautious stance on monetary policy, emphasizing the need for further inflation moderation before considering rate adjustments. Meanwhile, in the U.S., January’s inflation rate, matching expectations at 2.4%, suggests stability.
Attention now shifts to the upcoming release of U.S. Nonfarm Payrolls, which promises to offer critical insights into the trajectory of U.S. monetary policy. As traders brace for potential implications on interest rates, the EURUSD pair faces a volatile landscape shaped by inflationary trends and central bank deliberations.
Technical
The EURUSD currency pair has been navigating an uptrend, marked by a breakout above a descending channel pattern and trading above the 100-day moving average.
Notably, buying activity at the 1.06949 level established a crucial support level amid oversold RSI conditions. However, as the pair surged towards the 1.08883 level, a downturn ensued amidst overbought RSI conditions.
Currently retracing towards the 50% Fibonacci Retracement level, buying activity near this point suggests it now serves as an intermediate support level. Should upside momentum strengthen, a retest of the 1.08883 resistance level remains plausible. Conversely, a breakdown below the 50% level on high volume could expose the pair to further downside potential, with the 61.80% Golden Ratio emerging as a potential support level.
Summary
In a week marked by economic indicators, the EURUSD dipped slightly amidst Eurozone inflation easing to 2.6%. Policymakers’ cautious stance and stable U.S. inflation at 2.4% drive market sentiment. Technical analysis shows an uptrend with key levels at 1.06949 support and 1.08883 resistance.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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