The pair has fallen to its lowest level since February 15 this year following the release of encouraging data on US manufacturing activity on Monday. This improvement, the first since September 2022, has strengthened the position of the US dollar.
The Institute for Supply Management (ISM) reported that the manufacturing business activity index rose to 50.3 points in March from 47.8 in the previous month. This rise above the crucial threshold of 50.0 points, which distinguishes contraction from expansion, indicates a positive development for the sector.
Key insights from the report highlight an increase in new orders, although employment figures in the manufacturing sector remained subdued. Rising commodity prices also weighed on the overall index, which otherwise might have recorded a higher reading. Importantly, this data marks the end of the longest slowdown in the manufacturing sector in 16 months, a sector that makes up approximately 10.4% of the US economy.
Other economic data revealed that US core personal consumption expenditure (PCE) rose 0.3% in February, slightly below the expected 0.4% increase. This core PCE index, closely followed by the Fed, suggests that the Fed could have room to adjust interest rates downward in June 2024, given moderate inflation pressures.
Market expectations regarding the Federal Reserve's decision in June have undergone slight adjustments. Data from the CME FedWatch tool indicates a 66% probability of monetary policy easing, a slight decrease from 68% previously and a significant increase from 57% the previous week.
EUR/USD technical analysis
H4 Chart Analysis: The EUR/USD pair is currently in a consolidation phase around the 1.0794 level. A break down from this range could lead to a continued decline towards 1.0650. A corrective move back to 1.0794 could follow, testing from below, with a possible further decline to 1.0600. This scenario is supported by the MACD indicator, which shows the signal line below zero, indicating a continued bearish trend.
H1 Chart Analysis: A corrective structure has been completed at the 1.0804 level on the H1 chart. Following the press release, the market surpassed the level of 1.0777 and continued the downward trajectory towards 1.0720. Once completed, there could be a possible rally to 1.0790 (testing from below) before another drop to 1.0650. The stochastic oscillator, currently below 50, anticipates a further decline to the 20 mark, supporting the bearish outlook.
By RoboForex Analysis Department
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
