#EURUSD Signal: Euro Recovery Has Small Room to Run (21 Feb 2024)

Posted by Clara Mellor on 23:32 with No comments

Bullish trend with target at 1.0865, stop-loss at 1.0770. Focus on ECB meeting, Fed minutes. Key support at 1.0800, resistance at 1.0865.

Bullish view

  • Buy the EUR/USD pair and set a take-profit at 1.0865.
  • Add a stop-loss at 1.0770.
  • Timeline: 1-2 days.

Bearish view

  • Set a sell-stop at 1.0800 and a take-profit at 1.0700.
  • Add a stop-loss at 1.0865.

The EUR/USD pair rose to a two-week high as traders refocused on the upcoming ECB non-monetary policy meeting and Federal Open Market Committee (FOMC) minutes. After bottoming at 1.0695 on Valentine’s Day, the pair has rebounded by 1.35% to 1.0838.

Fed minutes and ECB meeting

The EUR/USD pair will be in the spotlight on Wednesday as the ECB holds a non-monetary policy meeting. This will be a normal meeting in Frankfurt and no interest rate decision is expected to come out of it. Nonetheless, the pair will react to any news that comes out of the meeting.

The ECB is contending with a double-whammy of stubbornly high inflation and slow economic growth, with some countries being in a recession. Germany, the biggest economy in Europe, has seen its industrial and manufacturing output tumble recently. The real estate sector is not doing too well either.

EUR/USD 4H chart analysis

The EUR/USD exchange rate bounced back as the US dollar lost momentum. The pair rose above the psychological point at 1.0800, which was also the 23.6% Fibonacci Retracement point. It has also jumped above the 50-period EMA and formed an XABCD chart pattern.

Further, the MACD and the Relative Strength Index (RSI) indicators have pointed upwards. Therefore, the pair will likely continue rising ahead of the FOMC minutes. If this happens, the next reference level to watch will be the 38.2% retracement point at 1.0865. A drop below the support at 1.0800 will invalidate the bullish view.

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