EUR/USD Declines on Anticipation of Hawkish US FOMC Minutes.
- The Euro may benefit from the Eurozone's January CPI numbers (scheduled tomorrow).
- The German IFO Business Climate Index was 91.1 in February, which was in line with forecasts.
- All eyes are on the Fed's meeting minutes.
Basic Analysis of the EUR/USD
EUR/USD is now trading at 1.0636, down -0.12% in 24 hours. The currency pair was under significant pressure ahead of the American trading day due to the imminent release of the FOMC Minutes.
CPI and IFO surveys in Germany
On the European front, consumer prices in Germany grew by 1.0% month on month in February after falling by 0.8% the previous month. That resulted in an 8.7% rise in the yearly total, above January's 8.6% gain.
The headline result of the German IFO Business Climate Index climbed from 90.2 in January to 91.1 in February. The statistics are in line with what was expected. Nevertheless, the Current Economic Assessment decreased to 93.9 points in February, down from 94.1 points in January and 95.0 points expected.
Also, the IFO Expectations Index, which shows firms' views for the next six months, increased to 88.5 in February from 86.4 the previous month, above expectations of 88.3.
Investors are now waiting for ECB member conversations to understand market sentiments in the aftermath of today's IFO numbers and the impending CPI data. Good data may add to the ECB's hawkish views, lifting the EUR marginally.
The headline result of the German IFO Business Climate Index climbed from 90.2 in January to 91.1 in February. The statistics are in line with what was expected. Nevertheless, the Current Economic Assessment decreased to 93.9 points in February, down from 94.1 points in January and 95.0 points expected.
Also, the IFO Expectations Index, which shows firms' views for the next six months, increased to 88.5 in February from 86.4 the previous month, above expectations of 88.3.
Investors are now waiting for ECB member conversations to understand market sentiments in the aftermath of today's IFO numbers and the impending CPI data. Good data may add to the ECB's hawkish views, lifting the EUR marginally.
The US dollar is surging as investors await the release of hawkish Federal Reserve meeting minutes.
EUR/USD Technical Analysis
The technical prognosis of the EUR/USD H2 Chart indicates that the negative trend will continue for some time. The price is now moving in a downward channel and below the daily trend line. The 20-Day SMA is below the 50-Day SMA, indicating that the price may continue to decrease in the coming hours. If it continues to decline, it may find support at 1.06116. Any break below this level would result in a big drop to the next support level at 1.05155.
However, technical indicators such as the Stochastic Oscillator are approaching oversold territory. It confirms that the price will continue to fall until the US Fed Minutes are issued. In addition, the Moving Average Convergence and Divergence (MACD) Indicator have begun to form longer histograms above the red signal line, indicating the degree of selling pressure.
Any break above the trend line would take prices toward the first psychological barrier around 1.06878 on the positive side. It is at the same level as the 100-Day Simple Moving Average. Any break over this level would take prices further closer to the 1.07253 mark.
Before entering the market with a short position, wait for the price to break below the 1.06116 level. At the same time, a long position is recommended if the price breaks above the 1.0686 level.