Could EUR/USD Bears Remain Strong For Lower Prices?

Zi Cheng

Summary:

The EUR/USD pairing is consolidating near the 1.0700 mark and may have potential to further extend its decline.

SELL EURUSD

Close Time

CLOSED

1.07308

Entry Price

1.04475

1.08434

1.13447 -0.00364 -0.32%

112.6

Pips

Loss

1.04475

1.08434

Exit Price

1.07308

Entry Price

1.08434

Fundamental Analysis

The EUR/USD pair struggles around the 1.0700 mark as the US Dollar continue to strengthen with the higher inflation data that could reduce the chance of Fed reducing the interest rates. Financial markets turned risk-averse on Tuesday following the release of the US Consumer Price Index, which rose beyond expectations in January. The figures supported the Federal Reserve’s case of waiting longer before loosening the monetary policy through rate cuts. Stocks plummeted and government bond yields soared, resulting in the 10-year Treasury note offering as much as 4.31%, its higher since last December.

Fears receded during Asian trading hours, with local stocks trading with a better tone and limiting USD gains. Government bond yields are also down ahead of Wall Street’s opening, with the 10-year note currently offering 4.29%.

Meanwhile, European Central Bank officials commented on monetary policy. ECB Vice-President Luis de Guindos said on Wednesday that while the Eurozone inflation appears to be heading back to 2%, policymakers should not get ahead of themselves. “It will take some more time before we have the necessary information to confirm that inflation is sustainably returning to our 2% target,” de Guindos noted. Also, Governing Council member Boris Vujcic added that the central bank seems to be getting the inflation fight “right,” refraining from commenting on the timing for a policy shift.

Data-wise, the EU published December Industrial Production, up 2.6% MoM against a 0.2% slide anticipated. The second estimate of the EU Gross Domestic Product was confirmed at 0% QoQ and at 0.1% YoY as previously calculated. The US will not release relevant data, although several ECB and Fed speakers will be on the wires.

Technical Analysis

EUR/USD has been moving in a bearish market structure forming lower lows and lower highs since the start of 2024. The reason why it switched from uptrend to downtrend was because the Dollar strengthened aggressively over the Euro hence why we are seeing a bearish market structure right now.

EUR/USD has broken below the key support level with a huge imbalance showing how aggressive the sellers were for EUR/USD. Currently, price is retracing back up to fill the imbalance, I will be taking short opportunities from here as I will be selling at a higher price instead of chasing the lows. I also have the 200 Day SMA as my confluence as it act as a dynamic resistance stopping the price from heading higher.

Could EUR/USD Bears Remain Strong For Lower Prices?_2

TRADE RECOMMENDATION

SELL EUR/USD

ENTRY PRICE : 1.07308

STOP LOSS : 1.08434

TAKE PROFIT : 1.04475

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Could EUR/USD Bears Remain Strong For Lower Prices?

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TRADE RECOMMENDATION

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