EUR/USD Analysis Today 24/5: Bears Eyeing 1.08 Again (Chart)
Date
5/23/2024 2:51:45 PM
(MENAFN- Daily Forex)
For the second day in a row, the EUR/USD has given up its recent gains, which reached the 1.0885 resistance level at the beginning of trading this week. Losses reached the 1.0816 support level, closer to breaking the 1.0800 support level. This will ensure that the bears continue to move down as May trading draws to a close, moving away from its March highs.
Moreover, the traders are assessing monetary policy expectations, as the minutes of the last FOMC meeting and comments by several Fed officials indicated a hawkish stance. Also, it suggested that US interest rates will remain high for some time, as confidence in progress in combating inflation in the United States is not strong enough yet.
In Europe, the European Central Bank is likely to reduce borrowing costs in June. Recently, Bank Governor Lagarde indicated that there is a strong possibility of action on June 6 if economic data strengthens confidence that inflation will fall to 2% in the medium term. Currently, eurozone inflation is 2.4%, very close to the European Central Bank's target of 2% and well below 7% the previous year.
The European Central Bank will hold its next meeting on June 6th and is very likely to cut interest rates. Also, new Eurozone GDP estimates confirmed that the economy emerged from recession in the first quarter, and new forecasts from the European Commission still point to a soft-landing scenario.
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EUR/USD Technical analysis and forecast:
The EUR/USD pair has now declined to trade a few levels below the 100-hour moving average line. As a result, it appears that the currency pair is about to fall to the oversold levels of the 14-hour RSI . In the near term. according to the performance on the hourly chart, it appears that the EUR/USD currency pair is trading within a descending channel formation. Also, the 14-hour RSI appears to support a short-term bearish bias as it approaches oversold levels. Therefore, the bears will target extended declines at around 1.0793 or lower at the 1.0760 support. On the other hand, the bulls will target a potential profit rebound at around 1.0848 or higher at the 1.0876 resistance.
In the long term, and according to the performance on the daily chart , it appears that the EUR/USD currency pair is trading within an upward channel. However, the 14-day RSI has pulled back recently to avoid rising into overbought conditions. Therefore, the bears will target extended pullbacks at around 1.0730 or lower at the 1.0600 support. On the other hand, the bulls will look to ride the current rally towards 1.0901 or higher to the 1.1000 psychological resistance.
In general, the PMI readings for the manufacturing and services sectors for the Eurozone economies, led by Germany, will have a strong impact on the euro's performance today. For the US dollar, it will be affected by the announcement of the number of weekly unemployed claims and the PMI readings for the manufacturing and services sectors.
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