Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
The EURUSD pair continues to grapple with selling pressure, hovering near the 1.0650 mark and heading for a tenth consecutive week of declines, as the market awaits crucial PMI data from the US following the release of Eurozone PMI data earlier. The European Central Bank’s focus on managing inflation, particularly above 2%, hints at a more cautious approach, likely putting an end to the hiking cycle, a move that could further weigh on the Euro.
Across the Atlantic, the Fed’s decision to maintain rates may signal a boost for the US Dollar, creating headwinds for EURUSD. Economic data from the US, such as the drop in Initial Jobless Claims, offers some support for the greenback.
In addition to central bank actions, it’s the PMI data that’s stealing the spotlight, especially in the Eurozone, where business activity has faced significant challenges. The slight uptick in the Eurozone Composite PMI to 47.1 from a 34-month low suggests a mild easing, emphasized bets of a potential halt in the ECB’s monetary policy tightening path, but concerns remain. The US PMI is projected to rise slightly and is likely to influence trading opportunities around the EURUSD pair during the session.
Technical
The 4-hour technical analysis of the EURUSD currency pair reveals a cautious market sentiment. Currently trading at 1.06387, below the daily pivot point and around the 1.06305 level, the pair faces several significant indicators.
Price action finds itself below the 50-EMA, 100-EMA, and 200-EMA, with the 200-EMA notably higher than the other two, indicating a bearish trend. The falling RSI, currently at 41.25, and the RSI-based moving average at 45.91 confirm the downward pressure.
Short-term trading opportunities may arise if bulls manage to push the pair above the daily pivot point, targeting the 1.06751 resistance level. Beyond that lies the 1.07169 resistance.
Conversely, a sustained dip below the daily pivot point could see support at significant support at the 1.06305 price level. A break below the initial support would bring the 1.05971 and 1.05616 support levels into play in the short term.
Summary
The currency pair is headed for a tenth consecutive week of declines as the Euro continues to lose ground against the rising greenback. With the US PMI data looming, continued decline past the 1.06305 would leave the 1.05971 and 1.05616 supports within reach.
While a reversal would bring the 1.06751 resistance level into play in the short term.
Sources: TradingView, Trading Economics, Reuters, Markit Economics
