Eur/USD Big Picture: Weekly Review (11-15.03.2024)

EurUsd Big Picture - Quantum Strikes
EurUsd Big Picture - Quantum Strikes

Fundamentals

This week in the forex market, the EUR/USD pair experienced significant movements influenced by a series of high-impact economic releases from both the Eurozone and the United States. Here’s a breakdown of the fundamental events that shaped the market dynamics:

Eurozone Retail Sales:

The week kicked off with the Eurozone’s Retail Sales data for January, which showed a monthly decrease of 0.5%, contrary to the expected growth of 0.5%. Year-over-year, sales drastically slowed to a mere 0.3% increase, significantly below the forecasted 3.7%. These figures indicated a weakening consumer demand within the Eurozone, applying bearish pressure on the EUR.

Eurozone and US Inflation Rates:

Inflation remained a central theme this week. The Eurozone’s Consumer Price Index (CPI) for February met expectations at 118.1, maintaining inflationary pressures within the region. Conversely, the US reported stronger-than-expected inflation figures on March 12, with the CPI reaching 310.326 against a forecast of 310.3 and the monthly Inflation Rate matching the anticipated rise of 0.4%. These data underscored persistent inflationary trends in the US, bolstering the USD against the EUR.

US Producer Price Index and Retail Sales:

Midweek, the US released its Producer Price Index (PPI) for February, which surged to 0.6% month-over-month, doubling the expected rate and signaling increased inflationary pressures at the production level. Retail Sales also outperformed expectations, showing a monthly increase of 0.6% against the anticipated 0.8%, further supporting the USD’s strength.

Jobless Claims and Manufacturing Data:

The US labor market continued to exhibit resilience, with Initial Jobless Claims dropping to 209K and the 4-week Average Claims decreasing to 208K, both figures better than market forecasts. However, the NY Empire State Manufacturing Index for March revealed a significant contraction at -20.9, far below the expected -7, indicating challenges in the manufacturing sector.

Consumer Sentiment:

The week concluded with the Michigan Consumer Sentiment for March, which slightly declined to 76.5 from the anticipated 76.9, reflecting a marginal drop in consumer confidence within the US.

Conclusion:

Overall, this week’s economic releases painted a mixed picture of both economies. While the Eurozone struggles with slowing retail sales, the US battles with high inflation rates and a robust labor market. These contrasting dynamics have led to fluctuations in the EUR/USD pair, with traders closely monitoring these fundamental indicators to gauge future market directions.

As we move forward, it will be crucial for traders to stay attuned to upcoming economic releases and geopolitical events that could further influence the EUR/USD landscape. The interplay between Eurozone’s economic challenges and the US’s inflationary pressures will likely continue to be a key driver in the forex market.

Technical Analysis

This week’s trading session for the EUR/USD pair showcased notable technical movements influenced by a blend of economic releases and market sentiment. Here’s a detailed examination of the technical landscape:

Opening and Price Fluctuations:

The EUR/USD pair commenced the week at an opening price of 1.09376. Throughout the week, the currency experienced a range of fluctuations, reaching a weekly high on Wednesday at 1.09637, driven by mid-week market dynamics and anticipation of upcoming economic data. Conversely, the pair hit its weekly low on Friday at 1.08730, reflecting the market’s reaction to the culmination of high-impact news and adjustments in trader positions.

Market Volatility:

The Average True Range (ATR) for the week stood at 90 pips, indicating a moderate level of volatility compared to previous weeks. This volatility was particularly pronounced on Thursday, attributed to the release of several high-impact economic indicators from both the Eurozone and the United States, which significantly influenced market sentiment and trading activity.

Monthly Extremes:

From a broader perspective, the monthly high for the EUR/USD pair was recorded at 1.09813, while the monthly low was observed at 1.07980. These levels represent the outer boundaries of the pair’s recent trading range and serve as critical points for traders to monitor in the upcoming sessions.

Technical Outlook:

From a technical standpoint, the EUR/USD pair exhibited a bearish bias towards the end of the week, as indicated by the drop from the weekly high to the weekly low. Traders and analysts will be closely watching the monthly high and low levels for potential breakout or reversal signals.

The pair’s movement below the opening price and the subsequent establishment of the weekly low suggest a cautious sentiment among traders, possibly due to uncertainties surrounding economic growth and inflationary pressures in both regions.

Conclusion:

The technical analysis for this week highlights the importance of key price levels and market volatility in shaping the EUR/USD trading landscape. As traders prepare for the upcoming week, attention will be directed towards any potential economic developments and their impact on market sentiment.

The interplay between technical indicators and fundamental events continues to underscore the dynamic nature of the forex market. Traders are advised to maintain a vigilant approach, employing sound risk management strategies while navigating through potential market fluctuations.

Trading our dreams into reality,

Mihai Paul Olteanu