February 5, 2023
New Delhi, India
US Dollar Gains Strength as EUR/USD Faces Selling Pressure
The EUR/USD currency pair is navigating a challenging landscape, trading at 1.0780 and experiencing a 0.11% loss as of the latest update. The bearish outlook remains intact, influenced by the hawkish remarks from Federal Reserve Chairman Jerome Powell.
Fed’s Stance on Rate Cuts
In a statement on Sunday, Powell expressed that a rate cut in March is premature, emphasizing the need for confidence in sustained inflation return to the 2% target. The Federal Reserve is cautious and wants to gather more certainty before considering significant policy changes, contributing to the recent strength of the US Dollar.
Technical Analysis Signals Bearish Momentum
Technically, the bearish outlook for EUR/USD persists, with the pair positioned below the key 100-period Exponential Moving Averages (EMA) and the Relative Strength Index (RSI) below the 50 midline. These indicators suggest a path of least resistance to the downside.
Key Levels to Watch
Immediate resistance for the major pair is identified at 1.0840, followed by the 50-period EMA at 1.0865. Upside barriers include the 100-period EMA at 1.0900, the upper boundary of the Bollinger Band, and psychological levels at 1.0967 and 1.1000. On the flip side, the initial support is at the lower limit of the Bollinger Band at 1.0752, with potential downside exposing levels at 1.0723 and 1.0660.
Also Read: LIC Shares Soar, Crossing ₹1000 Mark with Record Market Cap
Upcoming Catalysts: Services PMI Data
Investors are eagerly awaiting Services PMI data from Germany and the Eurozone, which could act as fresh catalysts for the EUR/USD pair.
In Summary: The EUR/USD pair is grappling with downward pressure, driven by Powell’s cautious stance on rate cuts. Technical indicators align with the bearish sentiment. Traders are closely monitoring key resistance and support levels for potential shifts in market dynamics.
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