financetom
Euro-Dollar
financetom
/
Forex
/
Euro-Dollar
/
Euro to Dollar Week Ahead: Near-term Pressures Are On
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Euro to Dollar Week Ahead: Near-term Pressures Are On
Mar 22, 2024 2:18 AM

EUR/USD under pressure near-termBut solid support could prevent meaningful weaknessWatch Fed decision on Wed. for potential breakdown

Above: File image of Chair Jerome Powell, image supplied by the Federal Reserve.

The Euro to Dollar exchange rate enters the new week under the grey clouds of 2024's short-term downtrend, which could extend over the coming days if the Federal Reserve pushes back against rate cuts on Wednesday and if we receive a bumper U.S. jobs report.

But those looking for a stronger Dollar are facing some frustrations as Euro-Dollar finds some reliable support above the 1.0825-1.0850 area, and we are wary of a solid bounce off this area if the Federal Reserve is not forceful in its push-back against market expectations for a first rate cut to fall as early as March.

As we can see in the chart below, 1.0825 forms a horizontal line that has offered handy support to the Euro over recent months, while 1.0850 is where the 200-day moving average is located:

Above: Euro-Dollar at daily intervals showing the key technical levels that matter this week.

Should this support level fail to hold, a relatively rapid decline to the December lows of 1.0723 becomes possible.

The successful defence or failure of the aforementioned support zone will depend on two key events in the coming week: Wednesday's Federal Reserve decision and Friday's U.S. labour market report.

If the Fed pushes back on rate cut expectations and U.S. labour figures beat expectations, USD could see another leg higher, finally prompting a breach below 1.0825.

Track EUR/USD with your own custom rate alerts. Set Up Here

However, we suspect it will require a decent above-consensus reading in Friday's data and a strong push-back by Federal Reserve Chair Jerome Powell to bring about such a move and trigger another leg lower in Euro-Dollar.

"The Fed is in a comfortable position with regards to both sides of its dual mandate. Cooling inflation warrants cutting rates towards neutral, but solid growth and labour markets allow the Fed to move gradually," says Antti Ilvonen, an analyst at Danske Bank.

He warns, however, that the recent fall in U.S. bond yields, as a result of expectations for generous rate cuts in 2024, leaves the market vulnerable to a pushback from Powell. This is because increased bets for rate cuts are reflected in lower bond yields, which weigh on lending rates.

Expectations, therefore, have real-world consequences that are at odds with the Fed's desire to loosen policy too soon.

"If Powell pushes back on the market notion of rapid rate cuts, as we anticipate, we could see a lower EUR/USD upon announcement. Our forecast for the cross is lower at 1.07/1.05 on a 6/12M horizon," says Ilvonen.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
EURUSD suffers from negative pressure -Analysis-08-05-2025
EURUSD suffers from negative pressure -Analysis-08-05-2025
May 25, 2025
The EURUSD declined in its recent intraday trading, with the emergence of the negative signals on the (RSI), after reaching overbought levels previously, to surpass the support of its EMA50, which increases the negative pressure on its upcoming trading. The last decline led the price to settle again below 1.1340, which reinforces the negative scenario amid the dominance of the...
EURUSD suffers from negative pressures-Analysis-24-04-2025
EURUSD suffers from negative pressures-Analysis-24-04-2025
May 25, 2025
The EURUSD settled bearishly in its recent intraday trading, affected by the technical formation negativity, which was formed previously on the short- term basis, represented by the rising wedge pattern, which causes correctional pressures on the price. The continuation of the trading below EMA50, besides the emergence of weakness signals from the (RSI), after offloading some of the exaggerated oversold...
EURUSD moves in a limited range -Analysis-28-04-2025
EURUSD moves in a limited range -Analysis-28-04-2025
May 25, 2025
The EURUSD price settled on a slight decline in its recent intraday trading, due to the continuous negative pressure from its trading below EMA50, to keep moving in limited range of tight sideways trading, holding above 1.1310 support, taking advantage from the emergence of the positive signals on the (RSI). This came because of the domination of a bearish correctional...
EURUSD surrenders to the negative pressure-Analysis-25-04-2025
EURUSD surrenders to the negative pressure-Analysis-25-04-2025
May 25, 2025
The EURUSD declined in its recent intraday trading, affected by the continuous negative pressure due to its stability below the EMA50, accompanied with a negative technical formation that completed previously on the short-term basis, which is the rising wedge pattern. Additionally, the emergence of negative overlapping signals on the (RSI), after reaching exaggerated overbought levels compared to the price movement,...
Copyright 2023-2025 - www.financetom.com All Rights Reserved