EURUSD: Trading EUR/USD Through High Oil and Rate Volatility

EUR/USD: Energy Prices Testing European Growth

Price opened at 1.1718 closed at 1.1686.

Main drivers affecting the pair

• Inflation at 2.6%, usually high inflation is negative, but now it’s forcing the European Central Bank (ECB) to keep interest rates stable rather than cutting them, which helps the Euro remain buoyant.
• Oil price is increasing at 108/barrel due to conflict in the Middle East and as the UAE leaving OPEC. This gives stress in Europe more than the US because Europe imports more energy, which puts pressure on the Euro.
• Economic growth with Europe’s economy is growing slightly faster than the US right now and this is the main reason the Euro hasn’t crashed completely.

ECONOMIC INDICATORS FOR THE EUROZONE

TECHNICALS

The direction maxed out at the open and stayed under pressure all day. After touching a low of 1.1671, it performed a small improvement toward the closing bell.

The price is at 1.1686. The pair has lost some of its strength. It can no longer hold on to 1.1700.

The outlook, for the pair is bearish-neutral. We are expecting to see a lot of ups and downs in the price.

The price of the pair is currently staying in a range due to markets are waiting to see what the European Central Bank will say in its update.

Despite a broader attempt at a bullish transition, the short-term trend is being hampered by the inability to break back above key psychological resistance.

After The rally lost its steam near the 1.1850 ceiling, causing the bulls to retreat. On the 4-hour chart, the outlook has turned slightly defensive as the market struggles to hold above major moving average levels.

1st Resistance 1.1700 If the price is below this, the bears (sellers) are in control. If it gets back above it, things look more positive for the Euro.

2nd Resistance 1.1750 need to break this level to maintain its strength.

Support at 1.1665 If the price touches through this floor, it could signal a drop much further toward 1.1550.

Today since two major banks are speaking

• The European Central Bank Europe Will they be Hawkish (tough on inflation)? If yes, the Euro goes up.
• Federal Reserve with interest rates already at 3.75%, the focus is on their reaction to energy prices. If they signal that high oil will keep US inflation sticky, it may delay rate cuts, strengthen the Dollar and pressure the Euro.

Conflict update impact.  Any positive news regarding the Strait of Hormuz conflict possible to cause the US Dollar to drop as people stop seeking safety, which would send the EUR/USD higher.

Conclusion & The ACY Edge

Even though Europe's economy is growing, the EUR/USD is struggling to stay above 1.1700 because high oil prices and global tensions are making the US Dollar stronger. The outlook is currently leaning downward, and the Euro's next move depends on whether the European Central Bank can push back against the economic strain of $107 oil.

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