Will EUR/USD keep falling, or rebound is possible?
EUR/USD Fundamental Analysis
After posting moderate gains through the Asian and European sessions, EUR/USD forex pair faced some pressure in the early American session. It is mainly due to the release of stronger-than-expected US GDP data. The strength of the US dollar after the positive data release on Thursday dragged the pair downward and lost most of its daily gains.
The US Advanced GDP for Q4 2022 surpassed the expectations of 2.6% growth and actually reported a 2.9% growth. This indicated a progressive economy as inflation is decreasing and prices are falling. Furthermore, this raised the bar that the Fed will slow down the pace of rate hikes in upcoming monetary policy meetings. As a result, US Dollar Index improved and posted +0.28% gains in 24 hours with a 101.94 price.
In early trading sessions, EUR/USD was continuously rising despite the negative Spanish Unemployment Rate from Eurozone economic docket. The Q4 jobless rate in Spain increased to 12.9% against the forecasted 12.4% rate. In the late trading session, the US durable goods orders in December 2022 surged to 5.6% against the estimated 2.4%. Meanwhile, the unemployment claims from the previous week in the United States also fell short of expectations of 203K and were reported as 186K. The Prelim Wholesale Inventories and New Home Sales for December 2022 also reported green, giving strength to USD.
EUR/USD Technical Analysis
The H1 chart of EUR/USD analysis shows that the currency pair is currently facing selling pressure. The positive US economic data has shown its impact on most traders’ EUR/USD pairs. The critical support level stands at 1.08772. The price is already dropped below the 50-Day Simple Moving Average line (yellow).
However, the critical support level (S1) of 1.08772 is holding the pair. Any break below this level could trigger extra downside momentum towards the next support (S2) of 1.08584. Further selling pressure could increase the dropdown to S3 of 1.08413.
On the bullish side, as per this EUR/USD analysis, if this critical support level is maintained and buyers take control again, the EUR/USD could move past the 50-Day SMA. It could face first resistance (R1) at 20-Day Simple Moving Average at 1.09113. Any break above this level will definitely trigger a bullish rally towards the next resistance (R2) at 1.09249.
Meanwhile, the RSI indicator is giving mixed signals with hovering below the mid-point of 50. However, the upward-pointing RSI line gives hopes of a possible reversal. These reversal signals are confirmed by William %R, and the Stochastic Oscillator as both indicators are also flagging upward. There are more chances that EUR/USD will hold this critical support level of 1.08772.
EUR/USD Daily Technical Levels
Pivot Point: 1.0899