EUR/USD Analysis Summary Today
- Overall Trend: Beginning of a bearish bias.
- Support Levels for EUR/USD Today: 1.1640 – 1.1560 – 1.1490
- Resistance Levels for EUR/USD Today: : 1.1730 – 1.1800 – 1.1880
EUR/USD Trading Signals:
- Buy EUR/USD from the support level of 1.1600 with a target of 1.1800 and a stop-loss at 1.1540.
- Sell EUR/USD from the resistance level of 1.1800 with a target of 1.1500 and a stop-loss at 1.1880.
Technical Analysis of EUR/USD Today:
The EUR/USD pair has continued to face selling pressure since the start of the week, as anticipated, ahead of market and investor reactions to key economic releases. These include the US jobs report at the end of last week and today's Eurozone inflation figures, due at 12:00 PM Egypt time. Prior to these releases, and based on the performance of reputable trading platforms, the EUR/USD exchange rate was hovering around the support level of 1.1690. Yesterday's bullish move failed to push the pair higher, with gains not exceeding 1.1742. The selling pressure on the pair has intensified, influenced by increased demand for the US dollar.
Factors of Bearish Pressure on Euro Trading:
According to Forex experts, the decline of the Euro against other major currencies—especially the US Dollar—is attributed to escalating geopolitical tensions following US military operations in Venezuela over the weekend. Additionally, President Donald Trump hinted at potential moves regarding Greenland and Colombia, suggesting that the United States will take a firmer foreign policy stance compared to the recent past.
Trading experts generally conclude that these tensions unsettle investors, driving them to seek a safe haven in the US Dollar. However, the stability of global stock markets at the start of the week challenges this theory, suggesting that the Dollar's rise is supported by other factors and that Trump's venture in Venezuela may not be the primary market-moving event that some enthusiastic analysts imply.
Generally, we believe the US Dollar is narrowing the selling range that accumulated late last year. We observed the currency reaching oversold levels against majors like the Euro and British Pound. For instance, the Relative Strength Index (RSI) on the EUR/USD daily chart reached overbought levels on December 23, hitting 70. Technically, due to the RSI's tendency to revert to the mean, downward pressure began to increase at this figure, necessitating a decline in the Euro's value against the Dollar.
This decline was already underway as the RSI fell below the neutral 50 line, confirming the growing downward momentum. Overall, we expect the EUR/USD pair to target at least the 100-day exponential moving average (EMA) at 1.1630 in the near term, where it will likely find some support. As long as the euro remains above the 100-day EMA, the outlook remains positive and consistent with a resumption of its upward movement during the second half of January and into February.
On the fundamentals – the economy – the euro will be supported this week by another positive reading of the Eurozone Consumer Price Index (CPI) on Wednesday, with core inflation expected to reach 2.4% year-on-year, according to economists' surveys. This aligns with the European Central Bank's (ECB) decision to maintain interest rates at their current levels for an extended period, which will provide support for the euro against the US dollar, while the US Federal Reserve will withdraw its support by cutting its benchmark interest rate several times this year.
Regarding the future of monetary policy, the ECB is well-positioned to keep interest rates at 2.00% for some time, with a potential increase later. Interest rate swaps are expected to remain stable over the next twelve months and then rise by 25 basis points to 2.25% over the next two years. Given the ECB's stable policy stance and the dynamism of US policy, the onus will be on US data to influence the euro/dollar exchange rate in the coming days.
Trading advice:
Traders advise considering buying EUR/USD below the 1.16 support, distributing trades across several entry levels to achieve the best gains without excessive risk.
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