Central Bank Hawks! EUR/USD Poised to Decline to 1.14

Summary:

Preliminary Purchasing Managers' Index (PMI) figures for Germany, the eurozone, and the United Kingdom are set to be released later on Tuesday, and the market will be focusing on them at that time.

SELL EURUSD

EXP

TRADING

1.14440

Entry Price

1.12000

1.16000

1.14271 -0.00375 -0.33%

0.0

Pips

Flat

1.12000

Exit Price

1.14440

Entry Price

1.16000

Fundamentals

The European Central Bank raised interest rates last week for the first time since 2023 and warned that war-driven inflationary pressures are spreading from the energy sector to the broader economy. ECB President Lagarde also reiterated this risk again this week. Currently, markets and economists widely expect the ECB to raise rates at least one more time, increasing the deposit rate by 25 basis points to 2.5%, while eurozone inflation is expected to remain significantly above the ECB’s 2% target for the foreseeable future.‌‌‌

At its latest monetary policy meeting, the Federal Reserve kept interest rates unchanged for the fourth consecutive time. The previous decision to hold rates was not passed unanimously; instead, there were three dissenting votes—a rare occurrence—based on the view that the statement accompanying the rate decision should not include forward guidance leaning toward easing. This time, however, the decision passed unanimously, indicating that language suggesting a potential rate cut has been removed from the statement—one of the reasons behind the market’s significant revision of its expectations regarding the Fed’s hawkish stance.

Technical Analysis

On the daily chart, the EUR/USD Bollinger Bands are widening downward, and the moving averages are diverging downward, indicating that the overall downtrend remains intact. The MACD has formed a death cross, and the RSI stands at 32, suggesting that the market is dominated by pessimism. On the four-hour chart, the Bollinger Bands are widening downward, the moving averages are diverging downward, and the price is oscillating downward along the lower Bollinger Band. The RSI stands at 33, indicating that market participants are predominantly selling. The recommended strategy is to sell on rallies.

Central Bank Hawks! EUR/USD Poised to Decline to 1.14_1

Central Bank Hawks! EUR/USD Poised to Decline to 1.14_2

Trading Recommendation

Trading Direction: Sell

Entry Price: 1.145

Target Price: 1.12

Stop-Loss Price: 1.16

Support Levels: 1.14, 1.13, 1.12

Resistance Levels: 1.17, 1.2, 1.21

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Central Bank Hawks! EUR/USD Poised to Decline to 1.14

Risk Disclosure