EUR/USD Price Analysis – Sticky Inflation, Dovish Overtone Send Dollar Spiralling

On the back of a dovish tone from the Fed, the Greenback dipped against other major currencies. Focus now shifts to Friday’s NFP employment report. 

Key Points

• While the Fed is expected to keep interest rates the same, Chair Powell says a hike is unlikely to be the next rate movement. 
• This slightly dovish tone cost the Greenback against other major currencies. 
• The price now hangs within the 1.07431 support and 1.06681 resistance.

EUR/USD Daily Price Analysis – 02/05/2024

A mixed tone from Fed Chair Powell had an overarching sense of dovishness, causing the USD to lose 0.43% against the EUR on Wednesday. 

During the FOMC interest rate decision meeting, it was announced that the interest rate would remain unchanged within the range of 5.25%-5.5%, keeping borrowing costs higher for longer. When asked, Fed Chair Powell said there was a higher chance the next interest rate move would not be a hike and that it would take longer to hit the 2% inflation target. 

There’s a slightly bearish tilt on the pair according to the 50-day EMA and RSI on the daily chart. The RSI line has sort of stagnated below the mid-level, while the EMA line still hangs above the price. But when you zoom out on the daily chart, you’ll see that it has mostly been a sideways tussle for over a year now. 

EUR/USD Intraday Price Analysis – 02/05/2024

The pair has dipped into a range between 0.5 (1.07431) and 0.236 (1.06681) Fibonacci retracement levels on the hourly chart. This range leaves supports and resistance levels below and above, respectively. 

For resistance, it has 0.618 (1.07766) and 0.786 (1.08243) fib levels; for support, it has a 5-month low of 1.06011. Below the coverage of the Fib retracement tool, other support levels include 1.05674 and 1.05218.

Key Economic Data for the EUR/USD Pair – 02/05/2024

Employment reports from the United States will flow in on Friday, which may help investors get a good gauge of the country’s economic climate in the short term. Today, investors will also closely watch the weekly initial jobless claims, the trade balance, and the Fed’s balance sheet. ECB’s member Lane is also scheduled to speak at 14:30 GMT.

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EUR/USD Key Fibonacci Price Levels – 02/05/2024

Based on the 1hr chart, the key Fibonacci price levels for EUR/USD are these:

Support	Resistance
1.06681	1.07096
1.06011	1.07431
	1.07766
	1.08243

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