Is EUR/USD due for an Upward Correction?

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EUR/USD has fallen by about 1.70% since early last week. Europe has been largely affected by the third wave of COVID-19, an aspect that has lowered the value of the Euro against the US dollar. France, Italy, Germany, and the Netherlands are some of the European countries that have had to use lockdown measures to contain the deadly variant.

On the data front, the European Commission has indicated that consumer confidence in the Eurozone remained unchanged in March at -10.8. However, the region’s industrial sentiment has come in better-than-expected at 2.0 compared to the predicted -5.0. Later in the day, investors will be keen on how EUR/USD reacts to the preliminary German CPI figures. Analysts expect a reading of 0.5% compared to the prior 0.7%.

At the same time, the US dollar has continued to strengthen amid a surge in treasury yields. The greenback is trading at a 5-month high of $93.10. The dollar is finding support from the 10-year treasury yields, which rose by 2.92% to 1.765.  

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EUR/USD Technical Outlook

EUR/USD is trading at its lowest level since November 2020. On a 4-hour chart, the price is below the 25 and 50-day exponential moving averages. As at 09.20 GMT, the pair was down by 0.15% at 1.1747. After better-than-expected numbers on industrial sentiment, the price is likely to consolidate ahead of Germany’s CPI data.

A decline below 1.1700 will have the bears test the 5-month low of 1.1602. On the flip side, EUR/USD may be subject to an upward correction. If that happens, the price will target 1.1800, where it might experience some resistance. A further movement on the upside will have the bulls test the psychological level of 1.1900.

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