EUR/USD falls on hopes of Hawkish US Fed Minutes
- The Euro may receive a small boost from the Eurozone’s January CPI figures (scheduled tomorrow).
- The February reading for the German IFO Business Climate Index was 91.1, matching the expectations.
- All eyes on Fed minutes of meetings
EUR/USD Fundamental Analysis
EUR/USD is trading at 1.0636, down by -0.12% in 24 hours. The forex pair faced heavy pressure ahead of the American Trading session because of the upcoming Fed Minutes reveal.
German CPI and IFO survey
On the European side, German consumer prices increased by 1.0% month over month in February after declining by 0.8% the previous month. It caused the annual total to increase by 8.7%, surpassing January’s 8.6%.
The German IFO Business Climate Index’s headline increased from January’s reading of 90.2 to 91.1 in February. The figures are in line with expectations. Meanwhile, the Current Economic Assessment fell to 93.9 points in February, compared to 94.1 in January and 95.0 projected.
In addition, the IFO Expectations Index, which represents companies’ forecasts for the following six months, rose to 88.5 in February from 86.4 the previous month and above predictions of 88.3.
Now, investors are waiting for ECB member discussions to comprehend market sentiments following today’s IFO figures and the upcoming CPI data. Strong data may further support hawkish ECB forecasts, slightly strengthening the EUR.
Earlier this month, several favourable macroeconomic indicators showed that the US economy was growing and that inflation was higher than anticipated. Therefore, there are growing concerns that Fed might not continue to raise interest rates higher for a prolonged period.
Today, the FOMC minutes will signal whether policymakers want to resume to 25 basis point rate rise.
The Dollar Index (DXY) is still close to its most recent six-week high, trading at 104.24. Moreover, US Treasury yields increased, trading at 3.955, as the world’s largest economy’s growth gave the Fed higher flexibility to raise interest rates. As a result, markets now anticipate a higher rate increase from the Federal Reserve to control inflation.
The Dollar is rising as investors anticipate publishing the hawkish Federal Reserve meeting minutes.
EUR/USD Technical Analysis
The technical outlook of the H2 Chart of EUR/USD shows signs of a bearish trend continuing for a while. Currently, the price is moving in a descending channel and below the daily trend line. The 20-Day SMA is below the 50-Day SMA, giving signals that the price might keep falling in the coming hours. If it keeps on falling, it could face support at 1.06116. Any break below this level would trigger a massive fall towards the next support at 1.05155.
Meanwhile, technical indicators like the Stochastic Oscillator are moving towards an oversold level. It confirms that the price would keep declining till US Fed Minutes are released. Furthermore, the Moving Average Convergence and Divergence (MACD) Indicator have started to make longer histograms above the red signal line, showing the strength of selling pressure.
On the bullish side, any break above the trend line would push the prices towards the first psychological resistance at 1.06878. It is the same level where the 100-Day Simple Moving Average is resting. Any break above this level would push the prices further towards the 1.07253 level.
The idea is to wait for the price to break below the 1.06116 level before entering the market with a short position. At the same time, taking a long position is advised in case the price breaks above the 1.0686 level.
EUR/USD Daily Technical Levels:
Pivot Point: 1.0662