Despite a weaker US dollar, EUR/USD holds gains above 1.0550.
EUR/USD continues to trade in positive territory above 1.0550 on Thursday. The US Dollar stays on the back foot amid retreating US Treasury bond yields and helps the pair erase some of the losses it suffered after FOMC Chairman Jerome Powell’s hawkish surprise.
EUR/USD remains near monthly lows after the recovery faded near 1.0570 during the American session. The US Dollar failed to make a new leg higher but held onto recent gains. The Greenback looks firm as markets priced in “larger for longer” US interest rates. Data released on Wednesday helped consolidate expectations. Market participants also see a more hawkish European Central Bank (ECB) as recent surveys indicate a higher terminal rate.
Price action is being driven by a stronger US Dollar, keeping EUR/USD sellers in control. The DXY held at monthly highs, validating Tuesday’s rally triggered by FOMC Fed Chair Jerome Powell’s testimony before the US Congress. His comments boosted the odds of a larger rate hike from the Fed at the March meeting. On Wednesday, Powell testified again, offering no new information.
Regarding economic data, German Industrial Production rose more than expected in January, but Retail Sales unexpectedly fell. In the US, Automatic Data Processing (ADP) reported that private sector employment increased by 242K in February, surpassing expectations of 200K. In addition, the US Bureau of Labor Statistics (BLS) revealed on Wednesday that the number of job openings in January was 10.8 million, slightly higher than the market expectation of 10.6 million. The numbers show a tight labor market, helping the US Dollar and reaffirming Fed’s hawkish tone.
The economic docket on Thursday features no tier-one Eurozone reports and US Initial Jobless Claims. Markets will continue to digest Powell’s message while preparing for Nonfarm payrolls. The official jobs report due on Friday, together with next week’s US Consumer Price Index, could be critical ahead of the March Mar 21-22 FOMC meeting.
EURUSD TECHNICAL ANALYSIS DAILY CHART:
Tuesday’s significant decline has caused the EUR/USD to oscillate. The price of the pair dropped to a brand-new monthly low of 1.0525 before rising again. The fact that the recovery was only partial demonstrates the continued bearish pressure. A solid break below 1.0525/30 would reveal the 100-day SMA at 1.0505 and the 1.0500 regions; below that, the 2023 bottom at 1.0480 is revealed.
With Momentum below its midline and the RSI close to oversold levels, the risks for the EUR/USD pair are biased to the downside according to the 4-hour chart. A strong recovery over 1.0570 would reduce the negative momentum, although additional support for the Euro wouldn’t come until above 1.0620.
EURUSD is currently trading in a down channel.
EURUSD is currently trading below all SMA.
RSI is in buying zone which suggests bullishness and Stochastic suggests a downtrend.
EURUSD’s immediate resistance is at 1.05791 & its immediate support level is 1.05364
HOW TO TRADE EURUSD
EURUSD is trading in a down channel; currently, EURUSD has made a bullish flag-like structure, and it is at an important support zone, if it manages to hold above the support zone then we can see the upside.