The main EUR/USD currency pair retreated from a fresh two-week high at 1.1781. It currently sits just above 1.1750 as traders wait for the European Central Bank’s (ECB) monetary policy meeting. The duo showed remarkable fortitude. It stayed near the 1.1750 level, even with surprise better than expected Initial Jobless Claims number from the U.S.
As shown in the chart above, released on July 19, Initial Jobless Claims fell to 217,000 for the week. This represents a drop from the prior week’s total of 221,000. Analysts had been expecting unadjusted claims to jump up to 227,000, so the reported figures represent a very positive surprise for the market. Not surprisingly, this positive economic indicator didn’t do much to stir sentiment in the headline-averse EUR/USD exchange rate.
The market digested this news, holding the EUR/USD in place. It continued to stay above a flat 20 Simple Moving Average (SMA) just below 1.1710. This 200-day moving average has been a key dynamic support level that has helped the pair maintain its stability even during market sentiment volatility. Chartists often use the SMA to help them predict future price movements. This indicates that investors are still cautiously optimistic when it comes to the Euro’s performance against the Dollar.
Resistance levels for EUR/USD are seen at 1.1780, 1.1830, and 1.1875. These issues may be enough to threaten the duo’s chances of making a comeback after the recent highs of the past month. Immediately support is firm at the 1.1710, 1.1665, and 1.1620 levels. These levels provide a good base for a future rebound should the currency pair experience any downward pressure.
Short-term momentum is currently lacking clear directional trend strength for EUR/USD. It’s well below the 100 line, which indicates market uncertainty about the short-term direction of the market. Even though the Relative Strength Index (RSI) has dropped, it remains elevated at just under 59. This means that the euro is starting to lose some of its upward strength, but it is not in an oversold state yet.
So in addition to these technical indicators, economic growth in Europe does indeed seem a stellar picture. In July, the Composite Purchasing Managers’ Index (PMI) jumped all the way to 51.0. As a result, this accomplishment has reached its highest point in almost a year. This positive data is indicative of an increasingly optimistic economic outlook, offering a tailwind for the euro as it aims higher against the dollar.
The 4-hour chart shows that EUR/USD is heading to a now-bullish 20 SMA located at around 1.1720. If the pair is able to hold above this key support level, this trend may be the omen of an impending recovery.