EUR/USD to Retarget $1.0950 on ECB Chatter and March PMIs

Bob Mason
Updated: Mar 24, 2023, 06:46 UTC

It is a busy day for the EUR/USD. Prelim private sector PMIs from the euro area and the US will draw interest. FOMC member Bullard may have more impact.

EUR/USD Technical Analysis - FX Empire

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It is a busy day ahead for the EUR/USD, with prelim private sector PMI numbers for France, Germany, and the Eurozone in focus. Investors will likely need to see a further pickup in private sector activity to support the more optimistic economic outlook.

However, forecasts are mixed, with economists expecting the euro area composite PMI to slip from 52.0 to 51.9. Bucking the recent trends across the private sector, economists forecast the manufacturing PMI to rise from 48.5 to 49.0 while expecting the services PMI to decline from 52.7 to 52.5.

The devil will likely be in the details, with new orders, employment, and input and output prices likely to garner plenty of interest.

With economic indicators on the heavier side, investors should also monitor ECB member speeches. ECB President Christine Lagarde will speak at the European Council meeting in Brussels.

EUR/USD Price Action

This morning, the EUR/USD was down 0.05% to $1.08233. A mixed morning saw the EUR/USD rise to an early high of $1.08386 before falling into the red.

EUR/USD sees early red.
EURUSD 240323 Daily Chart

Technical Indicators

The EUR/USD needs to move through the $1.0861 pivot to target the First Major Resistance Level (R1) at $1.0898. A return to $1.09 would signal a bullish session. However, the EUR/USD needs hawkish ECB chatter and hotter-than-expected PMI numbers to support a breakout session.

In the case of an extended rally, the bulls will likely test resistance at the Thursday high of $1.09299 but fall short of the Second Major Resistance Level (R2) at $1.0967. The Third Major Resistance Level (R3) sits at $1.1073.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0792 in play. However, barring a Fed-fueled sell-off, the EUR/USD pair should avoid sub-$1.07. The Second Major Support Level (S2) at $1.0755 should limit the downside. The Third Major Support Level (S3) sits at $1.0649.

EUR/USD support levels in play below the pivot.
EURUSD 240323 Hourly Chart

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The EUR/USD sits above the 50-day EMA ($1.07434). The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($1.07434) would support a breakout from R1 ($1.0898) to give the bulls a run at $1.0950 and R2 ($1.0967). However, a fall through the S1 ($1.0792) would bring S2 ($1.0755) and the 50-day EMA ($1.07434) into play. A fall through the 50-day EMA would send a bearish signal.

EMAs remain bullish.
EURUSD 240323 4-Hourly Chart

The US Session

Looking ahead to the US session, it is a busy day on the US economic calendar. US private sector PMIs and core durable goods orders will draw interest. However, we expect the prelim Services PMI to have more impact on market risk sentiment and the EUR/USD.

Following the Wednesday rate hike, FOMC member James Bullard will also move the dial. Investors will want confirmation of a pause on rate hikes to ease pressure on the banking sector and fears of a more pronounced credit crunch.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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