The EUR/USD currency pair appears poised to continue declining. Sellers are looking for a clean break below the psychologically important 1.1400 mark. On Wednesday, the pair fell to a low of 1.1401, as the US Dollar continues to apply upside pressure. This is a successful move built on robust data from the United States. The strong hawkish monetary policy stance from the Federal Reserve has supported the USD against the EUR.
After trading, the EUR/USD currency pair recovered somewhat from its intraday low. It ran into sellers around the 1.1460 area. At the time of this writing, the pair is trading just under 1.1430, showing a consolidation phase and overall volatility. On the 4-hour chart, technical analysis shows that indicators are beginning to decline once more from negative territory. That means bearish sentiment is gaining momentum after a short-lived bounce from deep oversold territory.
The daily chart hardly leaves any mysteries about the bearish EUR/USD pair outlook. Technical impressions still indicate that we are at risk of breaking things to the downside. Traders should look for support at 1.1400, 1.1360 and 1.1325 if the selling continues today. On the flip side, key resistance levels come in at 1.1470, 1.1510 and 1.1555, which may limit upside potential.
The recent rise in the US Dollar has the result of a number of stronger than expected economic indicators. The real US economy surprised to the upside in the second quarter of this year, adding to the positive strong dollar narrative. According to the ADP Employment Change report, the private sector added 104,000 new jobs in July. This increase only adds to the impression that the labor market continues to be strong and resilient.
German economic data has been a bit of a mixed bag. The preliminary July estimate, released today, shows the Consumer Price Index (CPI) increasing by 0.3% from June to July. Compared to this time last year, it was up 2%. Although these numbers should still be seen as some inflationary pressures, they’re not enough to strongly lift the Euro against a still-strong USD.
In addition, the approaching August 1 deadline for tariffs has added a layer of uncertainty and negativity to market perceptions around the EUR/USD pair. US initial weekly unemployment claims unexpectedly increase to 218,000 vs 224,000 expected. This stunningly good news adds to the support for the dollar’s strength and the confusing watershed climate of uncertainty.
Looking specifically at the technical landscape for EUR/USD, it further highlights the influential presence of sellers. The 20 Simple Moving Average (SMA) is going down like a comic book character who just stepped on a land mine. This motion under both the 100 and 200 SMAs decidedly woos bearish placements within this currency set. Traders and market participants closely watch these indicators. Whether it’s algo-driven or human-based, traders rely on this information to identify potential entries and exits in their trading strategies.
Market dynamics are constantly shifting with every new piece of economic data and monetary policy decision. Traders need to be on their toes to changes in sentiment and look for technical clues. Continuing strong performance of the US economy is a huge driver at the moment. At the same time, unclear signals from Europe are likely to affect the EUR/USD pair in the coming days.