- The EUR/USD has gained upward momentum with lower US economic performance.
- Rising inflation and Hawkish ECB helped EUR.
- Upcoming data will impact the further direction of the pair.
EURUSD Fundamental Analysis
The EUR/USD is now trading at $1.0646, up 0.66% in the last 24 hours. Traders are looking forward to the forthcoming US Manufacturing PMI, expected in the latter part of the day during American Trading Hours, and Eurostat’s CPI Flash Estimate, due on March 2.
US economic performance
The US Conference Board’s (CB) Consumer Confidence fell for the second consecutive month, decreasing to 102.9 from 106.0 the month before (revised), and the US House Price Index was down 0.1% in December compared to -0.6% market expectations and -0.1% the month before.
The US dollar’s value declined as a result of lower-than-expected economic activity. The DXY is now down 0.42% over the past day, trading at 104.43, giving a boost to EUR/USD forex pair.
Rising inflation in Eurozone
On the European side, recent higher-than-anticipated Consumer Price Index (CPI) readings for France and Spain in February increased traders’ expectations on the maximum European Central Bank (ECB) interest rate to 4%.
These high inflation readings are likely to confirm the outlook of ECB officials that more rate increases beyond the one in March are necessary to keep inflation in check. Moreover, hawkish ECB policymakers supported the growth of the EUR and increased market sentiment.
Furthermore, S&P Global published a 48.5 Final Eurozone Manufacturing PMI. After eight months of contraction, manufacturing output in the Eurozone stabilized in February, and the results showed sticky inflation.
EUR/USD Technical Analysis
The H4 Technical Outlook suggests that the currency pair has resumed the upside. It has already moved passed its first and second resistance levels. Now it would see the soft third resistance at 1.07138. At this level, the forex pair might see some correction. However, there are more chances that the price will keep moving forward towards the psychological resistance at 1.07500.
On the downside, the pair will see first support at 1.0622, where the 50-Day Simple Moving Average is resting. The next support lies at the 20-Day Simple Moving Average level at 1.0588. This is the same level where EUR/USD started its recent rebound after breaching the descending channel.
Meanwhile, the technical indicators are also suggesting further upside potential for the pair. The Moving Average Convergence & Divergence Histograms have just started to appear above the zero line, suggesting a trend reversal. Furthermore, the Relative Strength Index (RSI) has also reached near the overbought level at 65. There is still room for the EUR/USD pair to enter into the overbought level, suggesting the rally would continue for a while. The idea is to wait for the price to breach above 1.07138 level; any break above would open a long opportunity in the market.
Daily Technical Levels:
Pivot Point: 1.0599