EUR/USD Fundamental Analysis
The US Federal Reserve met the market’s expectations and started easing the pace of tightening in February. The dovish rate hike of 0.25% was widely expected and already priced in the market. Therefore, it weighed heavily on the US dollar, bringing the USD index (DXY) below 0.30% to 100.60 levels in a day.
However, major attention was provided to the receding inflation pressure mentioned in the Fed statement. Furthermore, the Chairman of the Federal Reserve, Jerome Powell, ’s comments about further rate cuts during this year in case of an aggressive fall in inflation also grabbed the market’s attention. All these factors improved the market risk sentiment and offered strength to risk-based currencies like Euro.
Additionally, the EUR/USD was also gaining strength on Thursday due to the scheduled release of the ECB monetary policy statement and interest rate decision. All eyes are on ECB policy figures, which are also expected to follow in the footsteps of the Federal Reserve. Many analysts believe that ECB will also ease the pace of tightening due to the deteriorating bloc’s economic conditions. However, some also believe that the fight against inflation is necessary, so there will be a firm stance by ECB this month.
EUR/USD Technical Analysis
The technical analysis of the H4 chart of EUR/USD suggests that the pair might keep moving higher towards new tops after today’s ECB decision. The EUR/USD forex pair has been moving within a range for over two weeks now. However, the US Federal Reserve’s interest rate decision pushed the prices above the critical resistance of 1.09322.
The Moving Averages are all far below the current price level of 1.09939, suggesting a strong buying trend in the market. Furthermore, the Stochastic Oscillator in the overbought zone is also supporting this signal. Meanwhile, the RSI above the 60 levels with an upward wing also backing the bullish signals ahead.
If the pair continued moving upward, the immediate resistance could be at 1.10379. Any break above this level would push its prices to further heights towards the 1.10778 level. This is the same level where the weekly 100-Day Simple Moving Average line is resting.
On the bearish scenario, the pair will face immediate support at the 1.09332 level. Any break below this level could drag the prices further downside towards 1.07720. However, all the indicators suggest that the pair might continue to move higher for the time being in the short term.
Daily Technical Levels
Pivot Point: 1.0947