The EUR/USD pair has experienced a pronounced downturn, plunging to its lowest level since February 15 of this year, indicating a prevailing bearish sentiment.
Recent economic data from the United States has bolstered this downward trajectory. Notably, the latest jobs report revealed a substantial addition of 303,000 jobs last month, surpassing market expectations and marking the most significant increase in 10 months. Additionally, the unemployment rate in the US dropped to 3.8%, while wage growth continued its robust momentum. Conversely, in Europe, subdued inflationary pressures combined with a cautious approach by the European Central Bank (ECB) have fueled speculation that the central bank may initiate interest rate cuts as early as June. Moreover, insights from the latest ECB accounts underscore policymakers’ growing confidence in inflation nearing the 2% target, further strengthening the case for rate adjustments. Furthermore, recent data indicates a larger-than-anticipated decline in eurozone inflation to 2.4% in March.
Anticipation surrounds the upcoming US consumer price data, expected to reveal a significant slowdown in core inflation following the strong job numbers. The core Consumer Price Index for March, excluding food and energy, is forecasted to rise by 0.3%, down from a 0.4% increase in February. Similarly, the headline CPI is expected to show a comparable rise.
Forecasts suggest that the core price measure will see a year-on-year increase of 3.7%, the smallest since April 2021. While this figure is notably below the peak of 6.6% in 2022, recent developments in inflation remain mixed. These closely monitored inflation figures come amidst a backdrop of robust US monthly jobs reports, raising questions about the extent of labor market moderation and its implications for inflation.
Meanwhile, Federal Reserve officials maintain a consistent stance, advocating for patience until there is clearer evidence of inflation moderating towards their target before considering rate adjustments.
Technical Analysis and Forecast for EUR/USD
The Euro is grappling with mounting pressures amid ongoing concerns surrounding the European economy. The downward spiral of the EUR/USD pair intensified, plummeting to its lowest point since February 15. Analysis from Forex currency trading platforms underscores the severity of the euro’s decline against the US dollar, driven by economic data discrepancies between the Federal Reserve Bank and the European Central Bank (ECB).
The EUR/USD pair has maintained a robust downward trajectory in recent weeks, following its peak at 1.0978 in March. On the daily chart, the pair breached the lower boundary of a descending channel, with the exchange rate falling below both the 50-day and 25-day moving averages. Notably, a bearish crossover pattern emerged between these two averages, while indicators such as the Klinger Oscillator and the Money Flow Index (MFI) signaled further declines.
Consequently, the outlook for the EUR/USD pair remains heavily bearish, with attention focused on the support level at 1.0690. A breach below this level could precipitate a retreat towards the primary support level at 1.0600. However, a reversal of this bearish trend would hinge on the pair’s ability to breach the psychological resistance at 1.1000.
