EUR/USD Approaches 200-DMA Zone on US Dollar Weakness

• EUR/USD is approaching the critical 200-day moving average, reflecting cautious optimism in currency markets.
• The Fed's mixed views and weak US housing data contrast with the ECB's optimism about inflation and potential rate cuts.
• Durable goods orders and consumer confidence in the US will update the economic outlook.

The Euro pared some of its losses from Friday against the US Dollar, although it remains far from reclaiming the 200-day moving average (DMA) at 1.0839. The dollar has lost momentum and continues to bid late in the North American session, despite comments from Federal Reserve (Fed) officials. The EUR/USD pair is trading at 1.0837, with a gain of 0.28%.

EUR/USD rises despite divergent comments from Fed and ECB officials

Earlier, Atlanta Fed President Raphael Bostic predicted a rate cut in 2024 if the US central bank embarks on reducing borrowing costs. Lisa Cook echoed some of his comments, and both took a cautious approach, emphasizing that a premature easing of policy could entrench inflation. On the dovish side, the Chicago Fed's Austan Goolsbee still sees three cuts in 2024, adding that they need to see evidence of inflationary declines.

US housing data was weaker than expected, as new home sales fell 0.3% to 0.662 million, below estimates of 0.675 million and 0.664 million in January. On the other hand, the Chicago Fed announced an improvement in the national activity index, which went from -0.54 to 0.05, with a positive evolution in the four categories of the index.

On the other side of the pond, Eurozone (EU) consumer confidence in Spain remained practically unchanged, while officials at the European Central Bank (ECB), led by Mario Centeno, stated that inflation has peaked. Fabio Panetta added that EU inflation is falling rapidly towards its 2% target, leaving room to cut rates.

In addition, the EU agenda will include consumer confidence in Germany and the publication of GDP in Spain. In the United States, durable goods orders, consumer confidence and the S&P/Cas Shiller house price index will shed some light on the state of the economy.

EUR/USD Price Analysis: Technical Outlook

EUR/USD is forming a “bullish harami” candle pattern that would need buyers to reclaim the March 22 high at 1.0868, so they could be prepared to challenge 1.0900. However, the Relative Strength Index (RSI) remains in bearish territory despite pointing slightly higher, while the 200 DMA limits the pair's advance. If sellers were to move and drag prices below last week's 1.0806, that could expose 1.0800, followed by the Feb. 14 low at 1.0694.