The rate of EUR to USD had declined by more than 2 cents this week, as the interest rate projections for the FED and the ECB start to diverge, with markets now expecting more rate cuts from the ECB than the FED for 2024. EUR/USD was trading below 1.09 on Monday but closed the week at 1.0640.

EUR/USD Chart Daily – The Lower Highs Signalled the Decline

The Euro has experienced a significant decline over the past three days, primarily influenced by a hawkish Federal Reserve contrasted with a dovish European Central Bank (ECB). As a result, EUR/USD has plummeted more than 2 cents this week, marking its worst performance in almost a year.

Although there may be some retracement from severely oversold levels on intraday charts, any upside attempts are expected to be limited. The support level at 1.0720 is likely to now act as resistance. Sellers are targeting levels between 1.06-1.0630 and 1.05-1.0520, which may serve as potential support zones.

On Friday, we saw numerous ECB members deliver dovish remarks, hinting at the possibility of an interest rate cut in June. ECB member Muller indicated that slower inflation increases the likelihood of an interest rate cut in June. This statement aligns with the dovish sentiment expressed by several ECB members, suggesting a willingness to take further monetary policy action to address declining inflationary pressures. Given this scenario, it is challenging to foresee any significant support for the euro in the near term.

FED Members Highlight a Hawksih Outlook

Comments from FED Member Mary Daly

EUR/USD Live Chart