EUR/USD Analysis: How long does a dead cat bounce?

The US dollar was the worst performer against the EUR in more than a year in the last week. At the last ECB meeting, we saw a notable change. ECB president mentioned that " considering that inflation exceeded the bank's expectations, which opened the door to raising the expectations of the markets that we will witness a hike in interest during the current year compared to previous expectations that the first-rate hike we will witness in the year 2023.

This statement boosts the EUR against the US dollar and other major currencies. For a long time, ECB has been holding their negative interest rates, but this time SCB hints at a rate hike, though it's not in this year the following year.

From my experience, only a rate hike can't make a currency stronger unless economic growth and other economic condition develop. The European economic condition is not in good shape though the EUR has boosted from the ECB'sECB's president comments. We know ECB president Lagarde is a hawkish member. So, she did the same thing that she usually does.

So, fundamentally EUR can't dominate the USD. It became more apparent when the NFP report was released in the last week. NFP printed super positive, and the market is pricing a 50BP rate hike in March. If this week's CPI report print optimistic than forecast, it will be more confirmed. So, EUR is still back against the US dollar.


Technical View:
The 1.1500/1.1520 is a strong resistance level for the EUR/USD pair from the current level. Unless EUR/USD breaks above 1.1520, it won't change its uptrend. Even several trendline resistance levels are above the 1.1520 price zone until 1.1673. So, to the upside, EUR can more ever test till its trendline resistance level of 1.1673 price zone if EUR/USD can successfully break above 1.1520 price zone.

On the other hand, immediate support holds a nearly 1.1360 price zone from the present rate. Breaking below 1.1360/1.1350, we may see more downside pressure in the EUR/USD. Let'sLet's see what happened.


N:B: This is neither trading signals nor financial advice. This analysis is for education purposes only. Please like, comment, share and follow me if you like my analysis.