Euro Price Forecast: EUR/USD Recovers on GfK Consumer Confidence Data

EUR/USD ANALYSIS

• GfK consumer confidence shows encouraging signs for the euro.

• Durable goods orders and risk sentiment to drive trade today.

• Markets patiently await further directional input as EUR/USD trades in and around 1.10.

EURO FUNDAMENTAL BACKDROP

The euro managed to claw back some lost gains from yesterday’s cautious market sentiment after German GfK consumer confidence edged higher for the 7th consecutive month indicating consumer optimism around future income expectations.

ECB INTEREST RATE PROBABILITIES

Money markets are significantly more hawkish than last week as shown in the table below. Implied European Central Bank (ECB) rate hikes amount to almost 70bps in December 2023 up from 60bps last week.

The attraction for safe-haven assets took away from aggressive ECB guidance due to the resurgence of the banking crisis (First Republic Bank). Looking ahead, US durable goods orders are scheduled and expected to print higher than the February figure – supportive for the US dollar while the US trading could spark the risk-off appetite once more, weighing negatively on the euro. The ECB’s Vice President Luis de Guindos is speaking at Greece’s economic forum in Delphi which may provide some midday volatility.

EUR/USD ECONOMIC CALENDAR

TECHNICAL ANALYSIS

EUR/USD DAILY CHART

Daily EUR/USD price action stays planted around the 1.1000 psychological handle within an ascending channel formation (black). If banking fears continue to grip markets, we could see a break of channel support, exposing subsequent support zones.

Resistance levels:

• 1.1185 (March 2022 swing high)

• 1.1076

Support levels:

• 1.1000

• Channel support

IG CLIENT SENTIMENT DATA: BEARISH

IGCS shows retail traders are currently SHORT on EUR/USD, with 59% of traders currently holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment but due to recent changes in long and short positioning, we arrive at a short-term downside disposition.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

Written by Warren Venketas, Analyst for DailyFX