Eur/USD Big Picture: Weekly Review (18-22.03.2024)

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

The past week was eventful for the EUR/USD pair, with significant economic releases from both the Eurozone and the United States influencing market sentiment and currency value. Let’s delve into the fundamental events that shaped the market dynamics last week.

Eurozone Economic Indicators:

  • Consumer Price Index (CPI) for February: Released on March 18, the Eurozone’s CPI came in at 124.4, slightly above the forecasted 124.4, indicating persistent inflationary pressures within the economy.
  • ZEW Economic Sentiment Index for March: Surprisingly, the sentiment index jumped to 31.7 from the anticipated 20.5, suggesting growing optimism among investors and analysts regarding the Eurozone’s economic outlook.
  • HCOB Manufacturing and Services PMI for March: The manufacturing sector showed a contraction with a PMI of 45.7, below the expected 47. However, the services sector outperformed expectations, posting a PMI of 51.1 against the forecasted 50.5, indicating resilience in the service industry.

United States Economic Releases:

  • Building Permits for February: The data, released on March 19, showed an increase to 1.518M from the forecasted 1.495M, reflecting a robust housing market.
  • Federal Reserve Interest Rate Decision: On March 20, the Fed maintained the interest rate at 5.5%, aligning with market expectations. The subsequent economic projections and press conference provided insights into the Fed’s outlook on the economy.
  • Jobless Claims and Housing Data: Initial and continuing jobless claims, reported on March 21, came in slightly better than expected, indicating strength in the labor market. Additionally, the housing market showed surprising vigor, with existing home sales soaring by 9.5% month-over-month in February.

Eurozone vs. United States: Economic Sentiment and Data Analysis: The week highlighted a mixed bag of economic performances from both regions. The Eurozone’s higher-than-expected CPI and ZEW Economic Sentiment Index contrasted with the manufacturing sector’s contraction. On the other hand, the United States displayed strength in the housing market and job sector, despite the Federal Reserve’s decision to maintain interest rates, which was anticipated by the markets.

Market Impact and EUR/USD Movements: The EUR/USD pair experienced volatility throughout the week, influenced by the contrasting economic indicators and central bank decisions. The Euro showed resilience on positive sentiment and service sector performance, while the USD gained on strong housing and job market data.

Technical Overview:

The EUR/USD experienced a volatile week, with an opening at 1.0893. The pair reached a weekly high of 1.0943 on Thursday, driven by positive Eurozone sentiment and data. However, the momentum shifted dramatically on Friday, with the pair plummeting to a weekly low of 1.0802, attributed to a combination of the Fed’s steady interest rate stance and stronger US economic indicators, alongside growing concerns over the Eurozone’s economic disparities.

The Average True Range (ATR) for the week stood at approximately 140 pips, indicating heightened volatility as traders navigated through the flurry of economic releases and central bank announcements.