The EUR/USD currency pair continues to be weighed down by strong euro-negative sentiment, with headwinds keeping the pair trading near fresh weekly lows around 1.1552. This decline occurs even as the US Dollar (USD) flexes its muscle on the foreign exchange (FX) market. As such, the EUR/USD has confirmed one lower high and one lower low. This is a strong sign of bearish trend which traders are watching very carefully.
The EUR/USD is battling to remain above the mildly bullish 200 Simple Moving Average (SMA). At the same time, it has dropped under the now horizontal 20 SMA. Technical indicators further reveal that the pair is trading below the significant 61.8% Fibonacci retracement level. This level is important because it is the 50% retracement of the rally from mid-June/early July (1.1453 to 1.1830). For the bears, traders are looking to see 1.1550, 1.1510 and 1.1470 hold as support. Simultaneously, they have pinpointed possible points of contention at 1.1635, 1.1680, and 1.1725.
The recent movements in the EUR/USD pair can be traced back to other economic fundamentals and data releases. US initial jobless claims rose only once to 221,000 (expected 235,000). This robust news saw a swell of demand for the US Dollar and downward pressure on the EUR/USD price. This robust economic data from the US has only reinforced the dollar’s hold on first place. Most significantly June Retail Sales jumped by an astounding 0.6%.
The optimism about the state of the US economy is palpable. Those positive economic indicators are continuing to push demand for the USD. Traders are closely watching these developments as they directly impact currency valuations around the world.
Furthermore, comments made by US President Donald Trump regarding potential trade deals with the Eurozone and India have played a role in shaping market perceptions and expectations. These types of comments historically create a lot of whipsaw in currency pairs such as EUR/USD, as traders price in unexpected geopolitical moves in conjunction to economic data.
4-hour chart EUR/USD is bearish in the short-term, with a sharply bearish 20 SMA. This cumulative prevents from limiting any progress in their USD/RON pair. This technical development indicates a fight for bullish momentum to go forward in the face of continued bearish market mentality.
Market participants are navigating a very tricky environment for EUR/USD right now. We can see that bearish control really is still reigning supreme with lower lows on the week. Strong US economic data has helped lift the greenback’s fortunes. At the same time, the continuous intense pressure on the Eurozone has made it extremely difficult for the EUR/USD pair to flourish.