The euro didn’t wait for the European Central Bank meeting in the narrow range we anticipated but immediately headed towards its lower boundary at the level of 1.0796. We can assume that the lower boundary is slightly below, along the MACD line and the embedded price channel line around the mark of 1.0784. Here, the main struggle for breaking this support awaits, which will mark the start of a new medium-term trend.
The euro was at the level we are considering (1.0796) during the first half of December 2023, in the first half of February, in the first half of April, and in early May. Thus, during all this time, the ECB rate cut, which will happen next week, was not factored into the current prices at all. We believe that this is the real reason why the price will drop from the local high. Of course, the stock market played a significant role here – the S&P 500 plummeted by 0.74% on Wednesday. Neel Kashkari’s statement about the possibility of a Federal Reserve rate hike added to the excitement.
On the 4-hour chart, the price is ready to contend with strong support levels, but beforehand, it would be better for it to become stronger. The euro could make such a breakthrough as early as today, provided that the Eurozone employment data (unemployment rises) and the US GDP numbers for Q1 (GDP turns out to be higher than the forecasted 1.6%) do not disappoint, causing media discussions to intensify about an overheating US economy.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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