EUR/USD Technical Analysis – April 23, 2024

EUR/USD Technical Analysis – April 23, 2024
EUR/USD Technical Analysis – April 23, 2024

Overview

The EUR/USD currency pair remains under pressure, trading near 1.0650 in European sessions as investors anticipate the release of preliminary Eurozone and US business PMI data. With a resurgent demand for the US Dollar amid a cautious risk environment, the pair continues to show weakness. The upcoming PMI data are likely to influence market sentiment significantly, potentially increasing volatility in the trading of this currency pair.

Current Pivot Points and Notable Price Levels

The daily Pivot Point stands at 1.06494, with the following key resistance and support levels observed:

  • Resistance Levels:
    • Yesterday’s high: 1.06704
    • R1: 1.06749
    • R2: 1.06958
    • R3: 1.07213
  • Support Levels:
    • S1: 1.06285
    • Yesterday’s low: 1.06240
    • S2: 1.06030
    • S3: 1.05821

Recent Performance and Future Outlook

EUR/USD’s near-term trajectory seems increasingly bearish as it approaches significant historical lows. The breach of the 2024 low of 1.0601 (April 16) may intensify the bearish sentiment, potentially revisiting levels not seen since late 2023, including the November low of 1.0516. Conversely, any bullish reversal would encounter initial resistance at the 200-day SMA of 1.0814, with further substantial barriers at the recent highs of 1.0885 and beyond.

Macro Factors and Market Sentiment

The currency pair’s bearish tone is exacerbated by a modest rebound in the US Dollar, influenced by shifting expectations regarding Federal Reserve rate cuts. With the ECB potentially initiating rate cuts as early as June—much sooner than the Fed’s anticipated adjustments—the divergence in monetary policy continues to favor USD strength. This backdrop sets a cautious tone for EUR/USD, especially given the stronger economic resilience shown by the US compared to Europe.

Technical Indicators

The 4-hour chart underscores the bearish momentum, with key support at 1.0601. Any upward movement faces hurdles at 1.0690 and 1.0756, with the 100-SMA at 1.0739 further defining the resistance landscape. The Relative Strength Index (RSI) on this timeframe will be critical in identifying potential oversold conditions or signaling a consolidation phase.

Closing Thoughts

As EUR/USD navigates through these critical levels, traders should stay alert to the outcomes of the upcoming PMI releases, which could either exacerbate the current downtrend or provide a catalyst for a temporary reversal. The broader macroeconomic narratives and technical setups suggest a continuation of the cautious approach among market participants.

Trading our dreams into reality,
Mihai Paul Olteanu