EUR/USD Consolidates Forward of Potential Additional Losses :: InvestMacro

By RoboForex Analytical Division

Market sentiment stays dominated by escalating geopolitical tensions in Europe, that are dampening the euro’s outlook and fuelling demand for conventional safe-haven property, notably the US greenback.

The greenback’s energy is additional underpinned by the persistently hawkish rhetoric from the Federal Reserve. Officers proceed to sign that rates of interest might want to stay at their present ranges for longer than beforehand anticipated. This stance is strengthened by resilient US inflation information, solidifying market expectations that the Fed will preserve its present coverage course.

In stark distinction, the eurozone is grappling with a marked slowdown in enterprise exercise. The newest PMI information confirms a contraction throughout each manufacturing and providers sectors. In opposition to this deteriorating financial backdrop, the European Central Financial institution (ECB) has adopted a notably cautious tone, hinting at vital draw back dangers to progress. This rising financial coverage divergence with the US creates a elementary imbalance, exacerbating the downward strain on the only forex.

Consequently, the general elementary image continues to favour the US greenback, suggesting additional draw back potential for the EUR/USD pair.

Technical Evaluation: EUR/USD

H4 Chart:

On the H4 chart, EUR/USD is forming a good consolidation vary across the 1.1600 degree, following a transparent impulsive decline. This value motion suggests the event of a 3rd wave down. A decisive break beneath this consolidation vary would sign the resumption of the bearish impulse, with an preliminary goal at 1.1488. This bearish technical outlook is confirmed by the MACD indicator, whose sign line stays beneath zero and is pointing downward, indicating sustained promoting momentum.

H1 Chart:

The H1 chart reveals the completion of a downward wave to 1.1576, adopted by a corrective transfer to 1.1620, successfully outlining the present consolidation zone. A break above this vary might set off a short-lived correction in direction of 1.1655 earlier than the broader downtrend resumes, concentrating on 1.1500. Conversely, a break beneath the vary would straight activate the bearish wave in direction of 1.1488, which is projected to finish the primary leg of the bigger third wave down. The Stochastic oscillator aligns with this view, with its sign line turning down from the 80 degree and heading in direction of 20, reflecting constructing bearish momentum within the quick time period.

Conclusion

The mix of a supportive elementary backdrop for the greenback and a deteriorating outlook for the eurozone maintains a bearish bias for EUR/USD. Technically, the pair seems to be pausing inside a broader downtrend, with a breakdown beneath 1.1600 prone to set off the following leg decrease in direction of 1.1488.

Disclaimer:

Any forecasts contained herein are based mostly on the writer’s specific opinion. This evaluation is probably not handled as buying and selling recommendation. RoboForex bears no duty for buying and selling outcomes based mostly on buying and selling suggestions and opinions contained herein.