Eyes on the Prize: EURUSD’s Pivot Point and What Lies Ahead
Welcome to Triangle Profits Financial Blog! I’m Julie Fernandez, your guide through the ever-evolving world of Forex. Today, let’s dive into the latest ripples in the EURUSD pair.
The US Dollar’s Dance: Fed’s Latest Moves
- Unchanged Rates: The Federal Reserve, as anticipated, has left interest rates unchanged, signaling a pause in the tightening cycle.
- Economic Projections: Downward revisions in growth and core PCE for 2024 hint at potential rate cuts, with three projected in 2024.
- Powell’s Stance: Fed Chair Powell hinted at a potential rate cut soon, focusing on avoiding prolonged high rates.
- Economic Indicators: Consistent with expectations, US CPI and PPI data underscore a steady disinflationary trend.
- Job Market Signals: Recent job market data presents a mixed picture, with weakening signs but strong jobless claims and NFP releases.
- Manufacturing and Services PMI: A mixed bag here; manufacturing PMI contracted, while services PMI expanded.
- Market Forecast: The expectation is for the Fed to start cutting rates in Q1 2024.
Euro’s Path: ECB’s Current Outlook
- Status Quo on Rates: The European Central Bank (ECB) kept rates unchanged, indicating the end of its tightening cycle.
- Lagarde’s Remarks: ECB President Lagarde underscored the Eurozone’s economic frailties and the role of interest rates in taming inflation.
- Inflation and Labor Data: Eurozone CPI fell short of expectations, suggesting an imminent cycle end with potential rate cuts. The labor market remains tight.
- Eurozone PMIs: Manufacturing and Services PMIs slightly exceeded expectations but still indicate overall contraction.
- ECB’s Balancing Act: The focus remains on controlling inflation, with rate cut decisions expected in 2024.
- Market Anticipation: Rate cuts from the ECB are anticipated starting Q2 2024.
EURUSD Technical Analysis: A Closer Look
- Daily Timeframe: The EURUSD pair showed resilience at the 50% Fibonacci retracement level, with a recent surge post-Fed pivot. The critical resistance to watch is around 1.0950, with potential new highs above 1.13.
- 4-Hour Chart Analysis: A divergence with the MACD at the 50% Fibonacci level initially suggested a weakening momentum, but the Fed’s decision led to a reversal. Keep an eye on the 1.0830 level for potential buying opportunities.
- 1-Hour Chart Perspective: MACD divergence at the 50% Fibonacci level sets a target at 1.0912. With the ECB rate decision looming, traders should watch for potential pullbacks to the 1.0830 support for better risk-reward setups.
Final Thoughts: The EURUSD pair stands at a crucial juncture, influenced by central bank decisions and economic indicators. Stay tuned to Triangle Profits for more insights and updates!
Julie Fernandez, Senior Financial Analyst at Triangle Profits