Euro Gains Again As Markets Look to Big ECB, Powell Double Bill

Euro (EUR/USD) Price, Analysis, and Chart

• EUR/USD looks more comfortable above 1.08

• The ECB is expected to remain ‘in no hurry’ to lower record-high borrowing costs

• Fed Chair Jerome Powell is off to Congress for scheduled testimony

The Euro rose against the United States Dollar yet again on Wednesday and seems set for a fourth straight session of gains as the market looks ahead to the European Central Bank’s next monetary-policy announcement which is due on Thursday. The ECB is expected to leave interest rates alone at record highs for the fourth straight meeting thanks to stubbornly high inflationary pressures in the Eurozone. This is even though some of its national economies, notably Germany, look as if they could do with a bit of stimulus.

Still, core inflation remains at an annualized 3.9% and hasn’t moved for four months. This will concern the ECB, of course, and likely mean that the central bank remains in President Christine Lagarde’s recent words, ‘in no hurry’ to cut borrowing costs. Still, markets are becoming more certain that the Federal Reserve will be in a position to cut its rates by mid-year. Given that it’s perhaps unsurprising that the Euro should be seeing a bit of support.

The Dollar is likely to command most of the attention on Wednesday as Fed Chair Jerome Powell will shortly begin two days of scheduled testimony before Congress. According to the Chicago Mercantile Exchange’s ‘FedWatch’ tool, the markets believe a June rate cut is pretty certain but that March and May are unlikely to see action. The extent to which Powell is thought to have confirmed this thesis will dictate short-term direction for EUR/USD.

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EUR/USD Technical Analysis

EUR/USD Daily Chart Compiled Using TradingView

The past week’s gains have seen EUR/USD nose above its 200-day moving average, a point which offers support Wednesday at 1.08244.

February 14’s bounce appears to confirm the longer-term uptrend line in place from the ten-month lows of October 3, 2023, all the way down at 1.0448, however, that line has rarely faced a test since and probably shouldn’t be relied upon too heavily as meaningful support now. It now comes in at 1.07306, some way below the current market.

Bulls are edging the Euro up to its current broad range top at 1.08985. That was the intraday peak of February 2, most recently, but it also capped the market on two occasions back in December.A rise to that level might bring out the sellers again, but a durable move above it would probably bring January 11’s top of 1.09989 back into focus ahead of late December’s significant peaks. To the downside lies the psychological prop of 1.08, with February 29’s intraday low of 1.07960 in easy range should that break.

The Euro has effectively been in a new. shallow uptrend since February 14. That said it still doesn’t look drastically overbought according to its Relative Strength Indicator and, technically speaking, the bulls still appear to be in charge.

–by David Cottle for DailyFX