|

EUR/USD Forecast: Buyers aim to push it beyond 1.0900

EUR/USD Current price: 1.0850

  • The EU Hamburg Commercial Bank flash PMIs indicated contraction decelerated but remains.
  • Stock markets surged amid solid earning reports boosting the tech sector.
  • EUR/USD retains its near-term positive momentum after peaking at 1.0888.

The EUR/USD pair jumped to 1.0888 on Thursday as the US Dollar turned south following a solid performance in Asian equities, indicating an improved market mood. Stock markets rallied after NVIDIA unveiled its earning report, with higher-than-anticipated sales estimates, boosting the tech sector and risk appetite.

EUR/USD rally cooled down following the release of tepid European data. The Hamburg Commercial Bank (HCOB) released the February flash Producer Manager Indexes (PMIs), indicating a deceleration in the rate of contraction across the bloc's business activity. The Eurozone witnessed the slowest pace of decline in eight months, with the provisional PMI survey data revealing stabilization in the services sector, which helped somewhat to counterbalance the continued sharp downturn in manufacturing output.

The HCOB Flash Eurozone Composite PMI rose modestly from 47.9 in January to 48.9. Despite signaling a ninth consecutive month of contracting output, the latest reading points to a moderation in the extent of the economic downturn, excluding the initial months of the pandemic, since 2013. The manufacturing index contracted to 46.1 from the previous 46.6, while the Services PMI surged to 50 after printing at 48.4 in January.

However, the German HCOB Flash PMI data indicated a persistent contraction in business activity. February's report suggests that the downturn is intensifying as the Composite PMI held within contraction levels for the eighth consecutive month, falling to 46.1 from 47.0 in January. The manufacturing sector, in particular, experienced a sharp and accelerated reduction in output, with the index plummeting from 45.5 to a stark 42.3. The contraction in the service sector was milder, as the Services PMI improved to 48.2 from 47.7, still below the critical 50 mark that indicates expansion.

EU figures pushed EUR/USD towards the 1.0840 price zone, where buyers took their chances ahead of Wall Street's opening, as optimism prevails. The upcoming American session will see the United States (US) releasing the usual weekly unemployment figures and Existing Home Sales, while S&P Global will publish the February Flash PMIs.

EUR/USD short-term technical outlook

The EUR/USD pair trades a handful of pips below the 38.2% Fibonacci retracement of the 1.1139-1.0694 daily slump at 1.0865 and seems poised to extend gains beyond the intraday high. In the daily chart, technical indicators suggest a robust upward momentum after crossing their midlines into positive territory while maintaining firmly bullish slopes. At the same time, EUR/USD is currently developing above all its moving averages, with the 100 Simple Moving Average (SMA) crossing above a flat 20 SMA. The latter converges with the 23.6% retracement of the aforementioned slide at 1.0799.

As of the 4-hour chart, the EURUSD pair also exhibits a strong bullish momentum, although technical indicators have pared their rallies around overbought readings. Meanwhile, the 100 SMA is flat at 1.0780, while the 200 SMA also lacks directional strength at around 1.0840. Finally, the 20 SMA extends its advance above the 100 SMA, reinforcing the near-term bullish sentiment. The pair has room to extend gains towards the next Fibonacci level, the 50% retracement at 1.0915, should the intraday high be surpassed.

Support levels: 1.0800 1.0765 1.0720

Resistance levels: 1.0880 1.0915 1.0950

(This story was corrected on February 22 at 14:22 GMT to say that Germany's Manufacturing PMI stood at 45.5 in January, not 46.1)

Sections of this story have been written with the help of an Artificial Intelligence tool and validated by an editor.

Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

More from Valeria Bednarik
Share:

Editor's Picks

AUD/USD stays weak above 0.6900 after China’s trade data

AUD/USD struggles to capitalize on the previous day’s recovery and stays defensive on the 0.6900 level following the narrowing of trade surplus in China. Increased December Fed rate hike bets allows the US Dollar to pause its decline and weigh on the pair. US CPI data is next of note for the major.

USD/JPY retakes 158.00 on weak Japanese data; focus shifts to US CPI

USD/JPY attracts some dip-buyers and retakes 158.00 in the Asian session on Tuesday as a fall in Japan’s Household Spending offsets hawkish BoJ Summary of Opinions, undermining the Japanese Yen. Moreover, Fed hike bets support the safe-haven US Dollar and the currency pair. The market focus now shifts to the release of the crucial US CPI report.

Gold approaches $4,000 following US inflation data

Gold surrenders a big chunk of Monday’s advance and approaches the key $4,000 mark per troy ounce on Tuesday. The precious metal’s decline follows the solid performance of the US Dollar and rising US Treasury yields after US inflation figures.

Pi Network rebounds from record lows, exits oversold territory as momentum improves

Pi Network (PI) shows a strong recovery on Tuesday, up over 7% after recording its all-time low of $0.0624 the previous day. PI token’s appeal in the derivatives market shows minor improvement, with Open Interest rising to $6.21 million.

Five risks for the global economy in 2027

From AI bubbles to geopolitical breakthroughs, these are some of the five ways why this outlook could go wrong – or right: A severe correction in US stocks triggered by an AI meltdown, second-round inflation effects emerge at scale or geopolitical de-escalation delivers an energy peace dividend.


Gold reclaimed $4,100. Tuesday’s CPI test decides if it holds
Gold (XAU/USD) starts the week on a positive note, reclaiming the $4,100 psychological level as the US Dollar (USD) retreats from its recent highs. The precious metal recovers from Friday's losses, although investors remain cautious ahead of Tuesday's US Consumer Price Index (CPI) report, which could determine the next direction for Bullion.