EUR/USD Forecast: Euro recovers ground but not re-attracting bulls yet

Banking news helped risk sentiment on Monday; however, worries persist.
Euro supported by ECB rate hike expectations.
EUR/USD defends key short-term support, turns to the upside but shows lack of strength.

Matías Salord FXStreet

The EUR/USD rose on Monday toward the 1.0800 area, recovering some of Friday’s slide, supported by an improvement in market sentiment, amid easing concerns on the banking sector. Deutsche Bank shares recovered ground, but the German lender is still in the eye of investors. Concerns about the health of the banking sector in Europe and in the US linger. Late on Sunday, the Federal Deposit Insurance Corporation (FDIC) announced First Citizens is buying all of Silicon Valley Bank’s deposits, loans and branches.

Regarding economic data, inflation will take center stage this week. On Thursday, Spain, France and Germany will release their estimates of March inflation, and on Friday, the US Core Personal Consumption Expenditure Index is due. Until those figures, market participants will focus on risk perception.

Data released on Monday showed the German IFO Business Climate Index rose to 93.3 in March from 91.1, surpassing expectations. In the US, the Dallas Fed Manufacturing Business Index fell to -15.7 in March against the market consensus of -10.9. On Tuesday, US CB Consumer Confidence and home price data are due.

The Euro remains supported by expectations that the European Central Bank (ECB) will raise interest rates again in May. There will be plenty of ECB speakers over the following days amid the ongoing internal debate about what to do next.

EUR/USD short-term technical outlook

The EUR/USD held well above the 20-period Simple Moving Average (SMA), currently at 1.0670 on the daily chart. Also, above 1.0720/40, a key support area (Fibonacci retracement of recent rally, 55-day SMA and horizontal support), keeping the risk tilted to the upside. However, gains seem limited while unable to consolidate above 1.0900. A slide below 1.0620 would negate the positive outlook.

Ahead of the Asian session, the 4-hour chart shows EUR/USD moving with a bullish bias, near 1.0800 but without much conviction. The outlook looks set for more consolidation ahead, probably in a broader price range. A flat 20-period SMA awaits at 1.0815, which could prove to be a strong barrier, and then emerges 1.0860. A failure to recover 1.0800 would favor a test of 1.0775 and then 1.0750, which should limit the downside.

View Live Chart for the EUR/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD loses ground below 1.1850 ahead of FOMC Minutes

The EUR/USD pair loses traction near 1.1840 during the early European session on Wednesday, pressured by renewed US Dollar demand. Traders brace for the Federal Open Market Committee Minutes for signals on future rate cuts, which will be released later on Wednesday.

When is the UK CPI data and how could it affect GBP/USD?

The United Kingdom Consumer Price Index data for January is scheduled to be published today at 07:00 GMT. GBP/USD trades slightly lower at around 1.3556 as of writing. The 20-period Exponential Moving Average trends lower at 1.3593 and continues to cap rebounds. Price holds beneath this gauge, maintaining a short-term bearish bias.

Gold: Is the $5,000 level back in sight?

Gold snaps a two-day downtrend, as recovery gathers traction toward $5,000 on Wednesday. The US Dollar recovers from the overnight sell-off as rebalancing trades resume ahead of Fed Minutes. The 38.2% Fib support holds on the daily chart for now. What does that mean for Gold?

Pi Network rally defies market pressure ahead of its first anniversary

Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.