The US Dollar (USD) surged during the mid-European session, propelling the EUR/USD pair to a fresh one-month low of 1.0774. The decline intensified following Germany’s report of a 2.7% year-on-year decrease in Retail Sales for February, far worse than the anticipated 0.8% decline. Additionally, investors are closely monitoring central bank officials’ remarks, with upcoming rate cuts dominating market sentiment.
Hawkish Comments from Federal Reserve (Fed) and European Central Bank (ECB) H2: Fed Governor Chris Waller’s Statement Federal Reserve Governor Chris Waller’s hawkish comments on Wednesday initially bolstered the USD. Waller indicated a reluctance to cut the policy rate hastily, citing recent data that suggests maintaining the current restrictive rate may be prudent to steer inflation towards the 2% target sustainably.
H2: ECB’s Stance Meanwhile, European Central Bank (ECB) Board member Fabio Panetta signaled diminishing risks to price stability in the Eurozone, paving the way for potential monetary policy easing. Several ECB officials, including President Christine Lagarde, have hinted at a rate cut in June, echoing Panetta’s sentiments.
Market Reaction and Economic Indicators H2: Market Reaction Government bond prices declined following Waller’s remarks, while stocks rallied, buoyed by solid gains on Wall Street. However, the Japanese Nikkei witnessed a sharp decline as the Bank of Japan (BoJ) dampened expectations for additional rate hikes after initiating the first hike in nearly two decades.
H2: Economic Indicators The US released the final estimate of Q4 Gross Domestic Product (GDP), upwardly revised to 3.4% from the previous 3.2%. Additionally, Initial Jobless Claims for the week ended March 22 came in better than expected at 210K. The upcoming American session will feature the March Michigan Consumer Sentiment Index and February Pending Home Sales.
EUR/USD Short-Term Technical Outlook H2: Daily Chart Analysis The EUR/USD pair rebounded modestly above the 1.0800 threshold but remains vulnerable. It currently hovers above the 61.8% Fibonacci retracement level at 1.0803, with downward pressure favoring a full retracement towards the range’s base. Technical indicators on the daily chart suggest potential for a lower low, as the pair trades below all moving averages.
H2: 4-Hour Chart Analysis On the 4-hour chart, the risk tilts to the downside in the near term. EUR/USD trades below all moving averages, with the 20-period Simple Moving Average (SMA) accelerating below longer SMAs. While technical indicators have rebounded modestly, they remain below midlines without indicating a sustained recovery.
Conclusion Despite a rebound from intraday lows, the EUR/USD pair faces downward pressure, with support levels at 1.0795, 1.0750, and 1.0710. Resistance levels are seen at 1.0835, 1.0870, and 1.0920.
