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Analysis

EURUSD Technical Analysis | ECB holds rates steady, market anticipates June cut

BY Janne Muta

|January 26, 2024

EURUSD Technical Analysis - EURUD traded lower yesterday after the ECB decided to keep the rates unchanged but removed the language about price pressures and labour costs. At the same time, leaks from the central bank suggest a rate cut in June.

Christine Lagarde, President of the European Central Bank (ECB), stated that it is too early to consider interest rate reductions following a recent meeting. Lagarde cautioned against over-interpreting the removal of previous references to domestic price pressures and strong labour cost growth from official statements. Instead, she urged attention to the content that remains in the statements.

Markets anticipate a series of five rapid rate cuts beginning in early spring as the economic sentiment in Germany has deteriorated with the IFO coming in below expectations and services PMI at 47.6 signalling contraction.

The eurozone is seemingly in a recession, with inflation concerns expected to persist above the 2% target until 2025. Lagarde highlighted several risks, including the impact of monetary policy, geopolitical tensions, and global economic downturns.

Summary of This EURUSD Technical Analysis Report:

  • The market has continued to trade lower after it broke the bullish trendline. Traders could be targeting the nearest key support area at 1.0723 - 1. 0756. Alternatively, if the bulls manage to push the market decisively above this week's high (1.0930), the market might have an upside potential to around 1.1000.
  • The market is trading inside a bearish trend channel with the channel top currently at 1.0914. The level coincides with the SMA 50 and the SMA 20 and with a couple of market structure levels (1.0910 and 1.0930).
  • The 2h chart shows the market trying to break below the 1.0821 support level. In this timeframe, the nearest key resistance level is at 1.0849. The market remains bearish below this level and could be trading towards the channel low.

Read the full EURUSD technical analysis report below.

EURUSD Technical Analysis

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Weekly EURUSD Technical Analysis

The market has continued to trade lower after it broke the bullish trendline. Traders could be targeting the nearest key support area at 1.0723 - 1. 0756. Alternatively, if the bulls manage to push the market decisively above this week's high (1.0930), the market might have an upside potential to around 1.1000.

EURUSD is currently trading at the SMA 50, posing a risk for EUR bears, but at the time of writing, this EURUSD technical analysis offers bearish indications. Neither price action nor the indicator-based analysis shows strength in the weekly chart.

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Daily EURUSD Technical Analysis

EURUSD broke out of a tight price range the day before yesterday. This move took the market to a support level at 1.0877, and yesterday the market created a bullish rejection candle, with a daily close above this level. The indication is that the bulls might want to try and push the market higher.

However, Tuesday's downward move broke the market below a medium-term uptrend, and the trendline now creates an upward-sloping resistance closely aligned with the 1.0923 resistance level. Note also that the bearish trend channel's top coincides with them.

Therefore, EURUSD technical analysis indicates further downside below the 1.0923 level, and we could see the market trading down to 1.0818. Alternatively, should there be a decisive rally above this pivotal resistance at 1.0923, a move up to 1.0990 could be likely.

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Intraday EURUSD Technical Analysis

The 2h chart shows the market trying to break below the 1.0821 support level. In this timeframe, the nearest key resistance level is at 1.0849. The market remains bearish below this level and could be trading towards the channel low.

Alternatively, if there is enough demand in the market to push EURUSD decidedly above the level, a move to the 1.0870 - 1.0880 range could be likely. This is where a market structure level is relatively closely aligned with the SMA 50. All in all the indicator-oriented EURUSD technical analysis indicates bearish conditions with the moving averages pointing lower.

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Client sentiment analysis

39% of clients trading EURUSD are holding long positions, while 61% are holding short positions. Client sentiment data is being provided by TIO Markets Ltd.

Please note that retail client trading sentiment is often said to be a contrarian indicator. This is because trade data suggests that private (non-professional) traders, on average, trade against market price trends. You can follow the TIOmarkets client sentiment live on our Forex dashboard.

The next key risk events impacting this market

  • USD - Core PCE Price Index m/m
  • USD - Pending Home Sales m/m
  • EUR - Spanish Flash CPI y/y
  • USD - S&P/CS Composite-20 HPI y/y
  • USD - CB Consumer Confidence
  • USD - JOLTS Job Openings
  • EUR - German Prelim CPI m/m
  • USD - ADP Non-Farm Employment Change
  • USD - Employment Cost Index q/q
  • USD - Chicago PMI
  • USD - Federal Funds Rate
  • USD - FOMC Statement
  • EUR - Core CPI Flash Estimate y/y
  • EUR - CPI Flash Estimate y/y
  • All - OPEC-JMMC Meetings
  • USD - Unemployment Claims
  • USD - ISM Manufacturing PMI
  • USD - ISM Manufacturing Prices
  • USD - Average Hourly Earnings m/m
  • USD - Non-Farm Employment Change
  • USD - Unemployment Rate
  • USD - Revised UoM Consumer Sentiment

Potential EURUSD Market Moves

The market has continued to trade lower after it broke the bullish trendline. Traders could be targeting the nearest key support area at 1.0723 - 1. 0756. Alternatively, if the bulls manage to push the market decisively above this week's high (1.0930), the market might have an upside potential to around 1.1000.

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How Would You Trade EURUSD Today?

I hope this EURUSD technical analysis report helps you to make better informed trading decisions. Check the latest market analysis for other instruments and subscribe to receive them in your inbox as soon as they are published

While research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.

TIO Markets UK Limited is a company registered in England and Wales under company number 06592025 and is authorised and regulated by the Financial Conduct Authority FRN: 488900

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.

DISCLAIMER: TIO Markets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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