EUR/USD Daily Chart Analysis – 2024-04-18

Technical Analysis: The EUR/USD pair experienced choppy trading dynamics, starting near the 1.0635 level, with overnight lows reaching down to 1.0605. The early session saw a spike to 1.0660, but this was short-lived as a dip to 1.0632 followed due to buying pressure in the USD alongside a slump in equity and gold markets. However, this trend reversed as U.S. yields dipped, leading to the EUR/USD breaking above Tuesday’s high, closing the session with a 0.40% gain.

The currency pair is showing signs of a possible reversal from the bearish trend, indicated by the recovery after a doji candlestick on Tuesday and an uptick in the daily Relative Strength Index (RSI). The key technical level to watch is the previous resistance turned support around 1.0635. A sustained move above this level may confirm a short-term bullish bias, while any retreat below could see the pair testing the 1.0600 area again.

Fundamental Analysis: Fundamentally, the EUR/USD’s fluctuations are driven by shifts in risk sentiment and the changing landscape of U.S. economic indicators. With Thursday’s risk events including U.S. jobless claims, the Philadelphia Fed manufacturing index, and March existing home sales data on the horizon, these releases have the potential to significantly impact the direction of the pair based on their implications for U.S. economic health and consequent monetary policy expectations.

Overall Market Sentiment: The prevailing market sentiment appears to be cautiously optimistic, reflected in the recent rebound from lows and potential signs of technical reversal.

Sentiment Percentage Breakdown:

• 30% Positive: Optimistic sentiment is fueled by the EUR/USD’s ability to rally from recent lows and the softening of U.S. yields.
• 40% Neutral: A neutral stance prevails due to upcoming economic data from the U.S., which may provide clearer directional cues.
• 30% Negative: Despite the latest uptick, concerns about the underlying economic challenges in the Eurozone maintain a bearish outlook.

• The positive sentiment draws on technical indicators that hint at a possible continuation of the upward trajectory, supported by softer US yields. The neutral sentiment acknowledges the uncertainty preceding key economic releases that could reshape market perceptions. The negative sentiment remains grounded in the broader context of Eurozone’s economic fragility, which could limit the pair’s gains in the medium to long term.