Daily Technical Analysis EUR/USD: In search of recovery


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EUR/USD is holding unchanged above 1.0600, after posting losses on Tuesday. Short-term estimates indicate that the EUR/USD could extend its recovery if it breaks the 1.0660 level.

On Tuesday, the EUR/USD moved higher in the early hours of the US session after poor US housing data weighed on the dollar (USD). Later, however, announcements by Federal Reserve (Fed) Chairman Jerome Powell helped U.S. Treasury yields regain ground and served as support for the greenback.

Powell stated that the U.S. economy’s performance has been very strong, but he also noted that recent data suggest there has been no significant progress on inflation this year.

For today, the economic calendar offers no major releases from the U.S. economy. Several European Central Bank (ECB) policymakers, along with President Christine Lagarde and Fed officials, are scheduled to speak later today.

Last week, the ECB president had indicated that interest rates will be lowered soon, barring any market-changing surprises. Markets are fairly confident that the ECB will officially lower interest rates by about 25 basis points by June. It is unlikely that policymakers in Europe will provide clear signals about the monetary policy outlook beyond June.

Market players will also continue to pay close attention to headlines about geopolitical tensions in the Middle East. Israel announced on Tuesday that it will initiate retaliation against Iran. A war cabinet meeting is expected to be held on Wednesday to determine an appropriate response. A further escalation of the conflict may cause investors to seek safe havens, potentially benefiting the dollar.

Daily technical analysis EUR/USD April 17th

The Relative Strength Index (RSI) rose above 30, indicating that the EUR/USD is recovering from being oversold. On the upside, 1.0660 (static level) is lined up as imminent resistance. Should the pair break above this level and use it as support, it could extend its recovery towards 1.0700 (psychological level, static level) and 1.0730 (static level).

As supports are 1.0600 (static level), 1.0550 (October static level) and 1.0500 (psychological level, static level).

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