Markets Analysis

Eurodollar Declines as US Rate Cut Probability Diminishes and Dollar Index Surges【February 6, 2024】

February 06, 2024

Markets Analysis

Fundamental Analysis

  • The US ISM Non-Manufacturing Employment Index showed strong results, pushing the USD/JPY out of its consolidation phase to reach new highs.
  • Federal Reserve officials are cautious about rate cuts, pushing back the expected timing.
  • USD/JPY has reached the late 148 JPY range, and breaking into the 149 JPY range could bring the 150 JPY range into view.

EURUSD Technical Analysis

Analyzing the daily chart of the EUR/USD, it is currently hitting an upward trend line and showing some rebound, indicating it is being watched. The 1.072 USD to 1.075 USD range has seen significant rebounds in the past and may be watched again.

The overlap of the upward trend line and support band suggests that a rapid decline is unlikely. Moreover, with the Dollar Index reaching a 12-week high yesterday, there might be some adjustments today.

Whether it can break through 1.0725 USD is a key point of interest.


Day Trading Strategy (1-Hour Chart)

Analyzing the 1-hour chart of the EUR/USD, it has plummeted from 1.089 USD to around 1.074 USD, hitting the daily upward trend line and showing some rebound adjustment.

With the Dollar Index on an upward trend, the strong dollar trend seems likely to continue, especially as US economic indicators are performing well, suggesting stronger dollar buying. The EUR/USD is expected to have a long-term downward perspective, with an immediate target around 1.0625 USD.

For day trading, the strategy is to sell on rallies, with a sell limit order at 1.079 USD, take profit at 1.073 USD, and stop loss at 1.0825 USD.

Support and Resistance Lines

Upcoming significant support and resistance lines:

1.0800 USD – Resistance line
1.0740 USD – Upward trend line


Market Sentiment

EURUSD Sell: 13% Buy: 87%

Today’s important economic indicators

Economic indicators and eventsJapan time
Australia’s Policy Interest Rate12:30
Canada Building Permits22:30
FOMC Member CommentsFollowing day at 2:00

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.

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