Start of the day – 2.28.2024

Start of the day - 2.28.2024
Start of the day - 2.28.2024

EUR/USD Overview:

The EUR/USD pair has been experiencing a mix of fluctuations, currently stabilizing around the 1.0850 mark, with recent sessions seeing a slight decline towards 1.0840. This movement comes in anticipation of significant economic data releases from both the Eurozone and the US, including GDP figures and inflation data.

Key Levels:

  • Support: The pair has found support above the 1.0835 area, where trendline support intersects with the 200-day moving average. A breakdown below this level could lead to a move towards 1.0725 and then the critical 1.0700 handle.
  • Resistance: On the upside, resistance is located at 1.0890, near the 50-day simple moving average. A break above this could pave the way towards 1.0950.

Fundamentals:

  • The US Durable Goods Orders saw a significant decline, adding to the cautious sentiment.
  • The Eurozone Economic Sentiment Indicator and the US GDP data are awaited, which could drive the pair’s next moves.
  • German Retail Sales and CPI inflation data are also on the horizon, potentially impacting the euro’s strength.

DXY (US Dollar Index) Overview:

The DXY has seen a pullback from its February highs but is currently positioned at a significant support zone between 103.00 to 103.50. This area is crucial for determining the dollar’s next direction, especially ahead of the upcoming US inflation data.

Key Levels:

  • Support: The 103.00 to 103.50 region is pivotal, with 103.50 acting as a resistance-turned-support level. The DXY is also aligning with an ascending channel support at 103.50, adding to the area’s significance.
  • Resistance: Key resistance levels are identified at 104.45 and 105.00. The index needs to surpass these to confirm any bullish momentum.

Technical Outlook:

  • The DXY maintains a pattern of higher highs and lows, suggesting an underlying bullish sentiment as long as it remains above 103.50.
  • The upcoming US inflation data will be critical in testing this support zone and could dictate the dollar’s trajectory for the coming period.

Conclusion:

For EUR/USD, traders should closely monitor the 1.0835 support level and the 1.0890 resistance level, as breaks from these ranges could indicate the pair’s short-term direction. The upcoming economic data from both the Eurozone and the US will likely be the key drivers of movement.

For the DXY, the focus remains on the 103.00 to 103.50 support zone. The index’s reaction to this level, especially following the US inflation data release, will be crucial in determining its near-term trend. A daily close below 103.50 could shift the bias to bearish, while holding above could maintain the current bullish outlook.

Fundamental Analysis: EUR/USD and DXY

European Economic Indicators:

Consumer and Business Confidence:

  • The European consumer confidence in February showed a slight improvement from January’s figures but remained negative, indicating persistent pessimism among consumers. Business confidence also remained low, reflecting ongoing challenges in the economic environment.
  • The GfK Consumer Confidence for March in Germany remained steady, indicating that consumer sentiment is not worsening but still not optimistic.

Manufacturing and Retail Sales:

  • The Bank Austria Manufacturing PMI for February indicated a contraction in the manufacturing sector, staying below the 50-mark threshold.
  • Retail Sales in January showed a mixed picture with a slight month-on-month increase but a significant year-on-year decline, highlighting the ongoing struggle in the retail sector amidst inflationary pressures and economic uncertainty.

Inflation and Money Supply:

  • The M3 Money Supply growth was minimal, indicating tight liquidity conditions. Loans to households and companies showed a slight increase, suggesting a cautious expansion in lending.

US Economic Indicators:

Federal Reserve Speeches:

  • Speeches by Fed officials, including Fed Schmid and Fed Barr, were closely watched for insights into the central bank’s future monetary policy direction, particularly in light of recent economic data.

Durable Goods Orders:

  • The Durable Goods Orders for January showed a decline, indicating a slowdown in manufacturing activity and investment in durable goods, which could signal a cooling economy.

Housing Market:

  • The House Price Index showed a slight month-on-month increase, but the S&P/Case-Shiller Home Price Indices indicated a decrease, suggesting a mixed picture in the housing market.

Consumer Confidence:

  • The CB Consumer Confidence for February was higher than expected, indicating that consumers remain relatively optimistic about the economic outlook despite challenges.

Eurozone Data from Today:

Business and Consumer Confidence:

  • Business and consumer confidence figures remained low, reflecting ongoing economic challenges and uncertainty within the Eurozone.

Retail Sales and Inflation:

  • Retail Sales showed a significant year-on-year drop, indicating continued pressure on the retail sector. The Harmonised Inflation Rate YoY for February showed an increase, pointing to persistent inflationary pressures.

GDP Growth and Industrial Production:

  • GDP growth rates for Q4 were reported, showing modest growth, while Industrial Production YoY in December indicated an increase, suggesting some resilience in the industrial sector.

Upcoming data for today:

United States Goods Trade Balance

United States GDP Growth Rate QoQ

Conclusion:

The economic indicators from the Eurozone and the US present a mixed picture, with Europe grappling with low confidence and retail struggles, while the US shows strong GDP growth but with persistent inflationary pressures. These dynamics will continue to influence the EUR/USD pair and the DXY, with traders closely monitoring these fundamental factors to gauge future market movements. The upcoming data, particularly related to inflation and consumer sentiment, will be crucial in shaping central bank policies and market sentiment.