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MTrading Team • 2024-02-05

EURUSD slides beneath key support as Fed’s Powell defends hawks

EURUSD slides beneath key support as Fed’s Powell defends hawks

EURUSD dropped to the lowest level in two months after Federal Reserve (Fed) Chairman Jerome Powell firmly pushed back the March rate cut. The same allowed the Euro pair to keep the previous day’s downside break of a 1.0810 support confluence comprising the 200-bar Exponential Moving Average (EMA) and a four-month-old rising trend line. Additionally keeping the sellers hopeful are the bearish MACD signals. However, the below 50.0 level of the RSI (14) line raises doubts about the downside momentum and hence the bears need validation from December’s low of around 1.0720 to tighten the grips. Following that, October’s high of 1.0695 and early November swing low surrounding 1.0655 will be in the spotlight.

Alternatively, the EURUSD rebound needs acceptance from the support-turned-resistance confluence of around 1.0810 and the US ISM Services PMI. Even so, a downward-sloping resistance line from early January, close to 1.0875 at the latest, quickly followed by the 1.0900 threshold, will act as the final defense of the Euro sellers before giving control to the bulls. It’s worth noting, however, that the quote’s successful trading above 1.0900 enables the buyers to aim for the 1.1000 psychological magnet and November’s peak near 1.1020.

Overall, EURUSD teases bears on hawkish Fed concerns but the road toward the south appears long and bumpy.

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