EUR/USD – Is a Reversal Imminent?

EURUSD Fundamental Analysis

• Bearish Divergence on the Stochastic Oscillator gives possible reversal signs.
• 200-Day SMA crossing 100-Day SMA from below confirms the signal.
• US Holiday, FOMC meeting minutes on Focus

The EUR/USD exchange rate was down 0.07% to $1.0687 at the time of writing. The EUR/USD might have a calm day. However, investors remain wary at the start of a week that contains the publication of key Eurozone activity data and the minutes from the recent Federal Reserve meeting.

Eurozone activity

The US Presidents’ Day holiday on Monday, February 20, limits the volume of trade in Europe. However, the flash PMI statistics for February, which are due on Tuesday, February 21, and will reveal how well the Eurozone economy is doing after surprisingly expanding in the fourth quarter of 2022, will be the focus.

On February 22, Germany’s Ifo Business Climate Index will reveal how the region’s largest economy is handling the energy crisis. On February 23, the union will announce the final inflation estimates for January.

The Consumer Confidence Index in the Eurozone is the only event on the schedule that sticks out today. It might show a negative reading, but any good surprise might offer the euro a brief rise. Also, more hawkish comments than anticipated might support the EUR/USD.

A heavy data week ahead, including US PCE #inflation, revised Eurozone CPI, and US personal income.
We get the #Fed minutes and more Fed speak, together with #BoE officials and, for the first time, the just nominated #BoJ governor. Look also for the #G20 meeting on debt in India. pic.twitter.com/GhKha9jzpw

— Mohamed A. El-Erian (@elerianm) February 20, 2023

Federal Reserve minutes of the meeting

On February 22, eyes will be on the minutes from the Fed’s most recent meeting amid intensified concern about how high-interest rates may finally rise following data that showed inflation is going to be stricter than policymakers had planned. Tomorrow, the Services PMI and Manufacturing PMI are scheduled to release, which will also impact the currency pair’s price.

The FOMC minutes likely need to be highly hawkish for the EUR/USD to continue following the trend. However, any unexpected thing from FOMC could also add to the volatility.

Global-Market Insights 2/n
-The focus will be on the FOMC Meeting minutes and speeches by Fed officials
-Data of personal income, spending, PCE price index, and 2nd estimate for Q4 US GDP
-PMI manufacturing and services readings for the US, UK, France, Germany, and Japan

— Neeraj Bajpai (@NeerajCNBC) February 20, 2023

EUR/USD Technical Analysis

The Technical Analysis of the 4H EUR/USD chart shows signs of a possible reversal. The bearish divergence on the Stochastic Oscillator and the 200-Day Simple Moving Average crossing 100-Day SMA from below confirm the reverse signal.

Currently, the 20-Day SMA is acting as immediate support for the currency pair at 1.068111. The Relative Strength Index (RSI) Indicator also moves towards an overbought level. If the currency pair continues moving to the downside, it will face the next support at the 1.06691 level. Any break below this level would trigger a massive downfall towards 1.05921.

In the bullish scenario, if the currency pair moves above the 50-Day SMA line, it could possibly start the reversal. The first resistance after this level would be at 1.07781. It is the same level where 100-Day SMA and the 200-Day SMA are colliding right now. The next resistance will be at 1.08044.

EUR/USD Daily Technical Levels:

Support	Resistance
1.0679	1.0691
1.0675	1.0699
1.0667	1.0703

Pivot point: 1.0687