The EUR/USD currency pair is grinding lower today, trading softly near 1.1640. This movement is accompanied by an apprehensive tone in the market. Traders are eyeing this closely as price trends slightly below the key 50% Fibonacci retracement of the latest advance from June. This level, around 1.1645, will be a key focus for traders looking for hints of more downside. The pair has had a tough time to gain upside momentum, with the sellers clearly in control for a second day running.
The next support for EUR/USD is seen just under at 1.1595. If so, it falls below this key threshold, look for the next significant objective close to 1.1560. On the other hand, possible resistance levels for the pair are located at 1.1585, 1.1725, and 1.1770. At the moment, the duo is currently exchanging only a handful of pips under the generally optimistic 20 Simple Moving Average (SMA). This SMA is located just above 1.1670. At the same time, the 100 SMA, located much farther below, still largely holds its bullish bias.
The daily chart suggests EUR/USD faces strong selling pressure, with technical indicators revealing signs of stronger interest to sell. These indicators have sped down further inside the abyss, beckoning greater confirmation of the bear market vibes taking over this market. A quite bearish 20 SMA has still continued its drop below the 100 SMA, providing dynamic resistance to upward attempts.
Weighing on trading behavior as well, has been recent disappointing economic data out of Germany and the United States. Germany’s Harmonized Index on Consumer Prices (HICP) received an upward revision. It currently stands at 2.3% y/o/y, revised upward from the last estimate of 2.2% in June. This change may have far-reaching consequences on the conduct of monetary policy going forward and affects markets’ expectations.
And just this week, the United States announced June’s CPI inflation rise of 2.7%. This is a significant increase from May’s 2.4% annual inflation rate. The US CPI core annual reading followed suit, jumping by 2.9%, an increase from May’s reading of 2.8%. These inflationary pressures should inform the Federal Reserve’s future calculus as it makes decisions on future interest rates and monetary policy.
As traders navigate through this economic landscape, they remain attentive to how these developments could impact the EUR/USD pair’s trajectory. As in all trend markets, the short-term support and resistance levels will be extremely important. Most importantly, they will decide if sellers can overcome the immense obstacles that stand in their way.