EUR/USD bulls need to consolidate above 1.12055 to face mixed market reactions
Based on the 4-hour chart analysis of EUR/USD, the price has reached a high of 1.124480. The upper target is identified at 1.12581, indicating a potential further increase. However, it is important to consider the price levels to watch out for, particularly the 4-hour price floor at 1.12055.
Looking at the 1-hour chart, a downside movement has been observed as the price retreated from its high of 1.12448 and broke below the lower support level at 1.12360. This suggests a bearish trend that seems to be heading downward. To assess whether the indicators and oscillators support this bearish trend in the short term, let’s examine their readings.
The indicators show 4 sell signals, 7 neutral signals, and 14 buy signals. Similarly, the oscillators indicate 3 sell signals, 6 neutral signals, and 2 buy signals. However, the stochastic indicator is at 97, suggesting a neutral trend.
The moving averages present a mixed picture, with 1 sell signal, 1 neutral signal, and 12 buy signals. The stochastic RSI is at a neutral level of 100. The 100-period simple moving average (SMA) is at 1.0851, and the relative strength index stands at 74.722. The MACD level is at 0.00778, indicating a buy signal. Although the price has broken below 1.12314, there is a possibility of an upward reversal.
The EUR/USD Daily Chart
EUR/USD Fundamentals:
Traders and analysts are approaching ECB rate cuts with caution, while the expectation for rate hikes by the ECB is still prevalent. Conversely, the market is displaying a more convincing anticipation of rate cuts for the US.
While there may be room for debate regarding the market’s perception of the Federal Reserve, recent inflation data indicates that the European Central Bank (ECB) will likely need to take further action or maintain a restrictive monetary policy for an extended period.
Despite a few dovish comments from some ECB board members. This suggests a different trajectory for the data at the moment. Where the ECB intends to demonstrate a commitment to fulfilling its mandate effectively. Traders view this as a positive factor for the Euro (EUR).
The cautious pricing of ECB rate cuts indicates that the market recognizes the need for the ECB to address the current economic challenges and potentially implement measures to stimulate growth. In contrast, the market’s more pronounced expectation of rate cuts for the US reflects a belief that the Federal Reserve might adopt a more accommodative monetary policy stance in response to economic conditions.
The differential expectations for monetary policy between the ECB; and the Federal Reserve play a significant role in shaping the market sentiment towards the EUR/USD currency pair.
Traders and investors will closely monitor any developments from both central banks, particularly the ECB’s commitment to maintaining a proper and effective approach to its monetary policy.
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