EUR/USD Daily Chart Analysis – 2024-03-07

Technical Analysis: EUR/USD started the session with an upward gap, posturing positively after a softened USD following Powell’s testimony. It experienced an early peak at 1.0904 before a slight retreat. Resistance is observed at the 50% Fibonacci retracement level of the December to February descent, near at 1.0916. A push beyond 1.0925 would open the path towards the 61.8% Fibonacci mark at 1.0975. On the downside, the pair finds its immediate support at the 50-day moving average at 1.0870. Further technical analysis indicates a bullish trend with the 5, 10, and 20-day moving averages aligned positively. However, a dip below the 10-day moving average at 1.0840 might signal a loss in upward momentum.

Fundamental Analysis: Fundamentally, the market’s focus is firmly set on the ECB decision, statement, and subsequent press conference by President Lagarde. Expectations are set for the ECB to hold its current policy stance while maintaining forward guidance. Investors will be parsing Lagarde’s comments for any hints of future monetary easing, which could significantly influence the Euro’s trajectory.

Overall Market Sentiment: The sentiment for EUR/USD can be quantified as follows:

• 55% Positive: The sentiment is cautiously optimistic, supported by the bullish technical alignment and expectations that the ECB may signal future easing.
• 30% Neutral: A neutral sentiment prevails given the current pivot around the 1.0900 mark, with traders awaiting the ECB’s decision before committing to a direction.
• 15% Negative: The slight bearish sentiment reflects the potential resistance at the Fibonacci levels and the capping effect of EUR/JPY selling.

The predominately positive sentiment mirrors the technical bullishness and market expectations that the ECB may lay the groundwork for easing, while the neutral sentiment accounts for the wait-and-see approach ahead of the ECB’s announcement. The negative sentiment acknowledges potential for resistance ahead and a possible change in trend if the 10-day moving average support gives way.