EURO (EUR/USD, EUR/JPY) ANALYSIS

• Traders are keeping a careful eye on the Federal Reserve’s next movements, which could impact the EUR/USD trajectory beyond the present exchange rate since the pair has recovered to around 1.0840 amidst a declining US dollar.
• Assuming the yen continues to be pressured in the absence of assistance from Japanese authorities, the stabilization of the EUR/JPY near 163.10 indicates a bullish feeling within its trading range, with medium-term targets ranging from 164.25 to 164.85.

EUR/USD Exchange Rate

Recent trading sessions have seen the EUR/USD pair challenge dynamic support levels without breaking through, indicating bullish exhaustion.

Even if the dollar has been more “hawkish” as market projections for Federal Reserve rate reduction have matched the Fed’s more cautious view, the euro hasn’t entirely benefited. The currency pair could fall more after initial attempts to break above the 50-day SMA failed.

EUR/USD Daily Chart

Source: DailyFX

The US GDP for Q4 was revised down from the first estimates, which gave the EUR/USD pair a short-term boost as it tried to make up ground it had lost earlier. The bigger picture, though, doesn’t look good for the euro.

This is especially true since the European Central Bank (ECB) might lower interest rates by 100 basis points, which would make the difference between their rates and those in the US even bigger.

Even so, the euro has been able to recover, and there is strong support around 1.0831. This makes it less likely that the euro will fall even further, toward 1.0700.

Report on European Positioning via Trader Commitment (Net-Long Positioning Swells)

Source: DailyFX

The pair made a comeback from its low point near 1.0800, helped by the US Dollar’s slower rise as people waited for important US economic data to come out. This comeback was also helped by rumors of a possible Fed rate cut, which could happen as early as June.

The market changed its odds for such an event to nearly 50%, which is a big jump from just a month ago. The ECB is careful about rate cuts in the future, but they are open to changing their mind based on new data. Some officials have said they would like to see a rate cut in June.

Even though the future is unclear, the pair finds support at the 55-day simple moving average (SMA) around 1.0885. It could then test higher resistance levels at 1.0932 and 1.0998. The EUR/USD pair is hard to understand for buyers. There are signs that the price will go up, but strong stops should be made near 1.0888 and the 200-day simple moving average (SMA) at 1.0827.

The 4-hour chart shows that the rise is likely to continue, and it also shows where the immediate support and resistance levels are. This gives traders a chance to find good entry and exit points as the pair moves between economic indicators and central bank policies.

EUR/JPY Exchange Rate

Recently, the EUR/JPY pair has been trading in a range that has settled around 163.10. This movement happened because the stochastic indicator left the overbought areas, which stopped the bullish trend for a while.

Even with this break, the pair’s safety within the bullish channel, which is supported by a steady base at 162.25, suggests that it might gain more positive momentum.

In the medium run, this could push the pair toward goals at 164.25 and 164.85. The price range for today is predicted to be between 162.80 and 163.70, and the trend is likely to be upward.

Also, the EUR/JPY has shown signs of consolidation as it approaches levels of support. However, the Japanese yen is still vulnerable because Japanese officials haven’t directly messed with the currency market.

This weakness supports the rise but points to a possible slowdown as the pair gets closer to the 164.31 resistance level. Depending on how much the euro falls overall, a possible return to the 161.70 support zone could be very difficult.

EUR/JPY Daily Chart

Source: Economies

But a short-term consolidation seems more likely, and a test of the 164.31 support level is still a possibility. This outcome is especially likely if Japan’s top currency official doesn’t use the country’s foreign exchange savings to support the yen.

Overall, the EUR/JPY is going through a phase of consolidation and will soon face resistance. However, the underlying rising trend is still strong, thanks to the weak yen and the fact that Japanese financial authorities haven’t stepped in yet.

Market Outlook

There are indications that the EUR/USD pair is having difficulty breaking through important resistance levels. Recent attempts to rise over the 50-day SMA failed, suggesting that there may be a pullback shortly. The depreciation of the US dollar and market expectations of a rate decrease by the Federal Reserve in June helped it recover slightly from its lows near 1.0800.

But the EUR/JPY pair is still in a bullish channel with 164.85 as a target, and it’s moving sideways around 163.10. This pause from the bullish trend is due to the stochastic indicator showing overbought conditions. The EUR/JPY’s potential is limited by the sensitivity of the Japanese yen and the lack of rapid action from Japan’s financial regulators, indicating cautious optimism among traders in both pairs.