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EUR/USD Latest: Trendline Break and Rate Expectations Climb to 3.75%

EUR/USD Latest: Trendline Break and Rate Expectations Climb to 3.75%


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EUR/USD News and Analysis

  • EUR/USD decline gathers pace on stickier PPI print and hawkish Fed comments
  • Technical update: EURUSD bearish break gains traction
  • Euro sentiment data, FOMC minutes and US consumer sentiment next week
  • The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library
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EUR/USD Decline Gathers Pace on Stickier PPI Print and Hawkish Fed Comments

In yesterday’s update, I highlighted the potential for a bearish breakdown of trendline support amid dovish comments by ECB governing Council member Fabio Panetta. Panetta walked back the incredibly unified message portrayed at the February ECB meeting, stating that the risk of over tightening remains and alluded to better-than-expected financial conditions to those that were witnessed months ago. Yet, despite the rather dovish comments, money markets priced in a terminal ECB rate of 3.75% for the first time - implying that the ECB still has another 125 bps worth of hikes to come.

source: refinitiv

Panetta’s comments are in stark contrast to what we heard from Fed officials yesterday. Lorretta Mester left the door open for a 50 bps hike in March while ultra-hawk James Bullard admitted he voted for a 50 bps hike in January and sees a case for more hikes to come.

On the back of the diverging ECB and Fed messaging, the PPI print echoed the sentiment of the recent CPI print – revealing a slowing rate of disinflation but disinflation nonetheless. PPI printed at 0.7%, beating forecasts of 0.4%.

EUR/USD Technical Update: Bearish Break Gains Traction

Yesterday’s price action closed right on trendline support which has now turned back into resistance. There was always going to be a question of whether the bearish move would attract the necessary momentum for a follow through and, admittedly, it is still too early to gauge but early indications appear to support that assumption.

In breakout situations it is often prudent to watch for a move back to resistance before assessing a bearish continuation thereafter. Support lies at 1.0615 heading into the weekend, followed by the 1.0450 zone of support. Resistance becomes the diagonal trendline followed by 1.0805. The MACD indicator suggest that momentum favors bears and the RSI reveals that the market is still some way from being considered oversold, allowing further room to the downside.

EUR/USD Daily Chart


Source: TradingView, prepared by Richard Snow

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Major Risk Events Ahead

Today there is little scheduled event risk with the main attraction being comments from the Fed’s Barkin, who has typically leaned slightly towards the more hawkish side but less so than Mester and Bullard.

The data hots up next week with final EU and German inflation data for January, updated GDP prints for the US and Germany for Q4, US PCE inflation data along with the FOMC minutes and EU sentiment figures. Judging by recent Fed comments, the minutes may confirm a more hawkish stance of prominent members of the rate setting committee – supporting the dollar rise.


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--- Written by Richard Snow for

Contact and follow Richard on Twitter: @RichardSnowFX

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