EURUSD Continues to Decline, Strong USD Amid Fading Rate Cut Expectations【May 24, 2024】

May 24, 2024

Markets Analysis

Fundamental Analysis

  • US Composite PMI Remains High, Inflation Reignites
  • FOMC Remains Hawkish, Rate Cut Expectations Fade
  • US Jobless Claims Decrease for Second Consecutive Week

EURUSD technical analysis

Analyzing the daily chart of EURUSD, we see a continued decline. This trend is driven by fading expectations of a US rate cut. The US PMI remains high, suggesting a re-acceleration of inflation. Furthermore, US jobless claims have decreased for the second consecutive week, marking the largest reduction since September last year. The FOMC minutes were hawkish, indicating prolonged monetary tightening.

These factors contribute to a strong USD across various currency pairs, including EURUSD. EURUSD is approaching the 38.2% Fibonacci retracement level, with 1.08 USD aligning with this level. A descending trend line also supports the lower side.

While a temporary rebound is expected, as long as the strong USD trend persists, EURUSD is anticipated to decline eventually.


Day trading strategy (1 hour)

Analyzing the 1-hour chart of EURUSD, the 90-period moving average is acting as resistance. Although there is a slight rebound at the daily 38.2% price range, the recovery is sluggish. With many factors supporting a strong USD and the ECB set to implement rate cuts, EURUSD is in a bearish environment.

Notably, US economic indicators are improving, which could indicate a shift in direction. The 4-hour chart, a higher timeframe, also shows a strengthening downtrend.

Based on this analysis, a sell-on-rebound strategy is deemed appropriate for day trading. An entry near 1.0835 USD, a take profit at 1.074 USD, and a stop loss at 1.0865 USD are recommended.

Support/Resistance lines

Consider the following support and resistance lines moving forward:

1.08 USD: Round number / Weekly support line


Market Sentiment

EURUSD: Sell 56%, Buy 44%

Featured Currency Pair of the Week (CHFJPY)

CHFJPY is in a range-bound market. Yesterday saw an upward movement, trading around 171.70 JPY. An upper shadow has formed, indicating a potential breakout to the upside. Although there are few economic indicators related to Switzerland, the yen is in a sell market, making CHF likely to rise relatively.

Focus on whether it can break above the recent high of 171.96 JPY.

Today’s important economic indicators

Economic indicators and eventsJapan time
Japan Nationwide CPI8:30
UK Retail Sales15:00
German GDP15:00
SNB Chairman Comments16:45
Canada Retail Sales21:30
University of Michigan Inflation Expectations23:00

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

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