EUR/USD price outlook: $1.046 support reinforced ahead of U.S. home sales data
EUR/USD remains in consolidation, testing key 1.0530 resistance.
EUR/USD price remains locked in a tight consolidation range this week, trading between a two-month resistance level at 1.0530 and a key support level at 1.0460.
After a rejection at the resistance level earlier in the week, which led to a bearish pin bar formation, the pair found support at 1.0460 and rebounded, challenging the resistance level once again. However, as of Wednesday, February 26, EUR/USD has retreated by 0.33% in the Asian session to 1.0487, though it has since climbed to around 1.0506 in the European session.
On the macroeconomic front, weaker U.S. economic data weighed on the U.S. dollar, allowing EUR/USD to recover some ground. The Conference Board’s consumer confidence index fell by seven points in February to 98.3, marking its third consecutive decline. This data fueled speculation that consumer sentiment may be weakening, adding pressure on the greenback.
Additionally, the euro found support from increased optimism over fiscal expansion in Germany. Reports indicate that Europe’s largest economy is considering a €200 billion emergency defense fund, which could lead to greater government spending. Furthermore, Frederich Merz, leader of the Christian Democratic Union (CDU) and Germany’s soon-to-be chancellor has not ruled out reforming the debt brake to support initiatives such as tax relief, lower energy prices, and higher military spending. These developments have strengthened the Euro’s appeal.
EUR/USD price forecast: RSI signals bullish bias as consolidation continues
EUR/USD price dynamics (Dec 2024 - Feb 2025). Source: TradingView
Traders are now watching for the release of the U.S. New Home Sales data for January, projected at 679K compared to the previous 698K. A higher-than-expected reading could support the U.S. dollar, while a weaker outcome may give EUR/USD another boost.
However, technical indicators suggest mixed signals for the pair. The daily and 4-hour Relative Strength Index (RSI) remains in bullish territory, while a combination of support factors reinforces the 1.0460 level. This includes the 50-period Exponential Moving Average (EMA) on the 4-hour chart and the February upward trendline providing additional support.
For now, EUR/USD remains in a consolidation phase, with price action largely to be dictated by technical resistance and support levels, as well as the upcoming U.S. New Home Sales data.
EUR/USD remained below key resistance, struggling to gain traction between key technical levels. Weak U.S. consumer confidence and manufacturing data failed to provide a clear directional push.
