FxWirePro- EURUSD Trade Idea

EUR/USD holds above 1.04000 levels on board-based US dollar selling. It hit an intraday high of 1.04420 and currently trading around 1.04253.

ECB policymaker Mario Centeno said the European Central Bank may have to take interest rates below the neutral level to restore the economy of Europe. The neutral range is estimated at between 1.75% and 2.25%. Centeno said if such effects are omitted, inflation will already be at less than 2%. The comments come amid growing concerns in Europe over deflation. He believes that interest rates will come down to 2% this year, which is currently 2.75%. The central bank declared its interest rate to be reduced by 25 basis points on January 30, 2025, with the same coming into effect on February 5, 2025. Thus, the deposit facility rate would be 2.75%, and the main refinancing operation rate would be 2.90%. Similarly, the marginal lending facility rate would be 3.15%.

Technical Analysis of EUR/USD

The pair is holding above the short and long-term moving averages in the 4-hour chart. Near-term resistance is seen at 1.0470; a break above this may push the pair to targets of 1.0500/1.0535/1.0575, and 1.0600/1.0660. Major bullish momentum is likely only if prices can break above 1.0660, where levels of 1.0700, 1.0760, and 1.0800 await. On the downside, support is seen at 1.0350 any violation below will drag the pair to 1.0300/1.0220.

Market Indicators and Trading Strategy

Commodity Channel Index (CCI)- Bearish

Average Directional Movement Index (ADX) - Neutral.  It is good to buy on dips around 1.0350 with a stop-loss at 1.0300 for a target price of 1.0535.