- According to forex market trading, the euro against the US dollar EUR/USD stabilized near the psychological support level of 1.0800 at the end of March trading.
- It is expected to lose about 2% quarterly against the US dollar, following the cautious shift in the European Central Bank's position.
In this regard, European Central Bank Governing Council member Piero Cipollone said on Wednesday that the European Central Bank is growing confident that inflation will return to its target of 2% by mid-2025 as wage growth moderates, strengthening the case for lower interest rates. Accordingly, investors now expect the European Central Bank to cut interest rates in June, although there are divided views on whether there will be two or three additional cuts before the end of the year.
Meanwhile, the US dollar maintained its recent gains, as investors scaled back expectations of large rate cuts by the Federal Reserve in response to strong US economic data and cautious comments from central bank governors. On the other hand, the yield on 10-year German government bonds continued to decline to 2.3%, reaching its lowest level since March 11, as investors continued to assess the cautious signals from the European Central Bank while processing preliminary inflation data from the largest economies in Europe. European Central Bank Governing Council member Piero Cipollone said yesterday that the European Central Bank is growing confident that inflation will fall to its target of 2% by mid-2025, in line with a group of policymakers calling for lower interest rates this year.
However, markets slightly tempered their expectations for the ECB's 2024 rate cut to 90 basis points earlier this week, following a statement by Atlanta Fed President Rafael Bostic on Friday in which he expected the US Fed to cut by 90 basis points. Just 25 basis points in 2024. Moreover, Inflation had risen to 3.2% in March, although marginally below market expectations of 3.3%.
On the economic front, EU services sentiment for March came in below the expected reading of 7.8 at 6.3. Industrial confidence for the period exceeded estimates of -9 with a reading of -8.8.
The economic sentiment index for this month improved to 96.3, up from 95.5 in line with expectations, while consumer confidence remained unchanged at -14.9 in line with estimates. From the United States, durable goods orders for February exceeded expectations of 1.3% with a change of 1.4%. Durable goods orders excluding defence for the period also exceeded estimates of 1.1% with a change of 2.2%, while durable goods orders excluding transportation exceeded 0.4% with a change of 0.5%. On the other hand, non-defence capital goods orders excluding aircraft exceeded expectations of 0.1% with a change of 0.7%.
EUR/USD Technical analysis and forecast:
The EUR/USD pair has now rebounded to trade near the 100-hour moving average line. As a result, the current pair has now risen to avoid falling to the oversold levels of the 14-hour RSI. In the near term, and according to the performance on the hourly chart, it appears that the EUR/USD currency pair is trading within a descending channel formation. However, the RSI on the 14-hour frame appears to have rebounded to avoid falling into oversold levels. Therefore, the bulls will target extended bounces at around 1.0856 or higher at 1.0884 resistance. On the other hand, the bears will look to pounce on profits at around 1.0800 or lower at the 1.0773 support.
In the long term, and according to the performance on the daily chart, it appears that the EUR/USD currency pair is about to complete the formation of the double reversal pattern. Also, the 14-day RSI appears to be supporting a long-term bearish bias after pulling back to avoid a rise in overbought levels. Therefore, the bears will target extended pullbacks at around 1.0700 or lower at the 1.0566 support. On the other hand, the bulls will look to pounce on bounces at around 1.0953 or higher at 1.1099 resistance.
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