Daily Technical Analysis: EUR/USD: Euro moves within technical levels


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The EUR/USD pair appears stable above the 1.0850 level in the early hours of this Wednesday’s European session, after posting slight losses in its price yesterday, Tuesday. Short-term technical estimates seem to indicate a lack of momentum for recovery; for now, markets are bracing for the Federal Reserve’s (Fed) monetary policy announcement today.

It is also worth noting that the decline in US bond yields, along with the rebound in major Wall Street indices, created a difficult environment for the US dollar (USD) to gain strength in the second half of Tuesday’s trading session and helped the EUR/USD pair erase most of its daily losses.

In response to current economic conditions, the Fed is anticipated to maintain its interest rate target range between 5.25% and 5.5% following its March meeting

Market investors will be paying close attention to the revision of the Summary of Economic Projections (SEP), also known as the dot plot. In December, the Fed’s dot plot, a graphical representation of the policymakers’ interest rate projections, indicated an expectation of a 75 basis point cut in interest rates for 2024.. If the new chart reaffirms that Fed officials still expect three 25 basis point cuts this year, markets could start to price in a change in monetary policy by June.

Market-derived data, as interpreted by several expert analysts in the foreign exchange market, suggest a 36% probability of the Federal Reserve keeping interest rates unchanged in June. The market believes that the dollar could come under downward pressure if the Fed capitulates and convinces investors that a cut is coming in June.

On the other hand, a hawkish revision to the SEP, with policymakers shifting their estimates to a 50 basis point cut this year, could boost the USD and have a strong impact on the EUR/USD pair.

Daily technical analysis EUR/USD March 18th

Looking at the chart, the Relative Strength Index (RSI) is below 50, which highlights the lack of momentum for a recovery in the EUR/USD pair.

In the current downtrend scenario, the initial support level is at 1.0600, with a significant potential support identified at 1.0500, as indicated by the Fibonacci retracement analysis.

Should the EUR/USD pair break above 1.0880, it would encounter subsequent resistance levels at 1.0900 and 1.0910, with a potential target for the uptrend around.

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