The EUR/USD currency pair maintains a neutral-to-bullish outlook in the short-term, according to technical analysis from the last several 4-hour charts. Even with moderation from a new two-week high, buyers continue to exert a powerful influence on the current market. At the moment, the EUR/USD is trading below the important 1.1700 level, but numerous technical indicators are signaling bullish potential.
On the daily chart the EUR/USD is giving an indication of wanting to pull back. Nevertheless, it continues to trade above all its moving averages. That reflects a strong underlying market strength as it looks for new direction. The 20 Simple Moving Average (SMA) protects the downside at around 1.1590, delivering a cushion from deeper pullbacks. On the upside, strong support levels can be seen at 1.1665, 1.1620, and 1.1590. These levels are furtative to the upward momentum they have begun.
The market’s risk assessment for EUR/USD is thus still tilted to the upside. News sentiment has turned positive, with technical indicators now trending northward, all signaling a potential bullish movement in the near future. For the first time in nearly ten years, our Momentum indicator has moved below its 100 line. This is a strong sign, suggesting that while there is room for bullish movement, the momentum may not be as strong as some traders wish it to be.
EUR/USD support levels now lie at 1.1675, 1.1655 and 1.1640. Resistance levels are 1.1715, 1.1750 and 1.1785. These are levels all market participants will be watching carefully. When they don’t see a spike in buying demand or bottoming patterns, they get disappointed.
The recent strong economic data has been a major factor in shifting bullish sentiment toward the EUR/USD currency pair. Lastly, the German Harmonized Index of Consumer Prices (HCIP) today confirmed a 1.8% YoY increase in July. This increase shows the continuing inflationary trend of the German price landscape. In July, measuring the HCIP, Germany announced an annualized inflation rate of 2%. Nationally, overall inflation was recorded at just 2.7%. This information is extremely important because it sheds light on the economic storm driving the Eurozone.
To combat these inflationary institutes, the European Central Bank (ECB) has resisted any calls to lower benchmark interest rates. This decision comes in the backdrop of much speculation about inflation spikes driven by U.S. tariffs enacted by President Donald Trump. Market participants have been shorting the U.S. Dollar (USD). This floodgate opening was exacerbated by a happy brand-new U.S. Consumer Price Index (CPI) release that created a good chipper atmosphere.
Traders are keeping a watchful eye on these developments as they will almost certainly dictate the longer-term direction of the EUR/USD pair. Should inflation continue to escalate in Europe and the US, currency markets might face increased turmoil. This new source of instability would be bad news for both investors and businesses.