Daily Technical Analysis by OnEquity

Commercial Content Analysts
1

Rises Above 1.0850, With All Eyes on the Data

The EUR/USD is up slightly around the 1.0860 level in early Asian trading hours on Monday. The pair rose as market traders are widely anticipating the US Federal Reserve to cut interest rates in September, which caused the dollar (USD) to move sharply lower.

Inflation in the US, which is generally measured by the change in the personal consumption expenditures (PCE) price index, barely fell in June compared to a year ago, easing the way for an interest rate cut by the Federal Reserve in September. PCE inflation continued its slowdown in June, falling from 2.6 per cent y/y in May to 2.5 per cent in June. On a monthly basis, the PCE figure rose by about 0.1% in June, after being unchanged in May. The core PCE price index, the measure of inflation used for an annual view and preferred by the Fed, rose about 2.6 year-on-year in June, up from 2.5% in May, according to Commerce Department figures released on Friday.

However, the lower June inflation in the US is not fully potent for the Fed to start cutting interest rates at its expected August meeting on Wednesday this week. Similarly, analysts noted that there is significant progress on inflation and this will most likely allow the Fed to move closer to interest rate cuts and as such, they also said they still expect three rate cuts this year, starting at the September FOMC meeting. Financial markets have dismissed by about 90% the likelihood of a September cut, followed by another cut in November and December, according to the CME’s FedWatch tool.

On the other hand, traders expect more rate cuts from the European Central Bank (ECB) in the near term. This, likewise, could weigh on the euro (EUR) versus the dollar (USD). The previous week, the ECB left interest rates unchanged, although weaker German IFO survey results and other softer data are paving the way for another rate cut by the bank. Traders will be looking closely at preliminary second quarter Gross Domestic Product (GDP) data for Germany along with the euro zone. If the data turns out better than expected, the common currency could gain ground against the dollar.

EUR/USD daily technical analysis for July 28nd:

According to the behavior on the attached daily chart, the trend remains strongly [bearish] towards the break of the important psychological support level of 1.0800, which if it happens, will give the bears more momentum to move sharply lower. Technically, the next important support levels will be 1.0745 and 1.0660, respectively. On the other hand, in the same time frame. As mentioned above, there will not be a strong and important change in the overall trend towards an uptrend without moving towards the psychological resistance of 1.1000 again.

2

Bearish Momentum May Last

The EUR/USD is expected to remain under pressure with signs of moderation in the coming days due to the amount of data to be released this week, especially today, Wednesday, when the Eurozone PPI and the Federal Reserve’s interest rate decision and subsequent statement will be released. The EUR/USD has lost ground this week from its July high of 1.0948 and has now had three straight weeks of declines.

s for the outlook for the currency pair, we expect a slight pullback to near the 50-day moving average at 1.0811 over the next few days. Additionally, this is the possible location for the 38.2% Fibonacci retracement from the high to the 2024 low.

In technical terms, a break of the EUR/USD exchange rate support level at 1.0780 would give the bears control over the trend.

This week, both the Federal Reserve and the European Central Bank will be in the spotlight, especially today, Wednesday, as inflation-related figures were released yesterday, primarily from Germany.

With the European Central Bank expected to cut interest rates again in September, it would take a major new data release to have a long-lasting impact on the Euro. Conversely, this week’s volatility will likely be driven by the dollar. The Federal Reserve will make its policy decision later today. Additionally, it seems that there will be no change in US rates.

Expectations are for an expansionary stance in line with estimates for the first interest rate cut in September. Currently, the market seems predisposed to such an outcome, which would translate into the dollar rising if the Fed leaves any doubt about whether it will begin its rate-cutting cycle in September. Additionally, the Fed is expected to continue its strategy of highlighting concerns that keeping interest rates unchanged for an extended period could significantly impact the labor market.

This is consistent with the Fed’s statement that it believes it can afford to cut US interest rates before inflation falls to its 2% target. On Friday, the most notable event for the dollar will be the release of the US employment report. If the data falls below expectations, the market will anticipate further easing of Fed monetary policy in the months ahead, which will weigh on the dollar.

July US nonfarm payrolls are expected to show an increase of 178,000 jobs, with the unemployment rate at 4.1%. In June, the figure was higher than expected, at +206,000 jobs.

EUR/USD Daily Technical Analysis for July 31st:

There is no change in our technical view on the performance of the euro against the dollar. The overall trend remains bearish, and a break of the 1.0800 support is feasible, which will consolidate control by the bears, potentially leading to further losses.

Technical indicators will move towards strong oversold levels on the daily chart if the euro/dollar price approaches the support levels of approximately 1.0735 and 1.0600. For the same time frame, the psychological resistance 1.1000 will continue to have the most relevance for the upward shift of the overall trend.

3

EUR/USD declines, fails to hold 1.10 level

The EUR/USD pared its recent gains and retreated from the 1.1000 level on Tuesday as markets continue to digest a recent rebalancing in Forex market flows. Investors have possibly regained equilibrium and have once again returned to betting on an increase in the pace of rate cuts by the Federal Reserve in September. Tuesday’s euro zone economic data had a slight impact on the market and Wednesday’s data will be released on the average level.

Pan-European retail sales contracted by -0.3% y-o-y in June, below estimates of 0.1% and down from a revised 0.5% in the year-ago period. German industrial production figures will be released on Wednesday, which are expected to rebound to 1% month-on-month growth in June from the previous period’s contraction of -2.5%.

According to CME’s FedWatch tool, investors are looking at a two-to-one chance of a double 50 basis point cut when the Federal Open Market Committee announces its interest rate decision on September 18. Currently, with the cut in place, the rate markets see zero chance of the Fed keeping rates unchanged for this year, with a total of four estimated quarter-point cuts for the latter part of the year.

During this week, watch for any news from Fed policymakers pointing to the desirability of accelerating interest rate cuts in the United States. This would boost the euro.

EUR/USD Daily Technical Analysis for August of 7th:

According to the daily chart, the uptrend in the EUR/USD remains in place. Selling from above is the best trading strategy. Obviously, selling above the psychological resistance at 1,000 is the best. The trend of the euro against the dollar today will be conditioned by the prospects of future signs of economic recession in the United States that may be announced by the heads of central banks around the world. On the other hand, and according to the daily chart, the 1.0820 support level will continue to be relevant for the bears to regain control of the trend.

4

Daily Technical Analysis EUR/USD: Rallies Above 1.0900, Upside Limited by Middle East Tensions

This week, investors will be focused on new inflation data, such as the Producer Price Index (PPI) and the Consumer Price Index (CPI) in the United States on Tuesday and Wednesday. Retail sales and the University of Michigan consumer confidence index will also be released this week. Core PPI inflation and headline CPI inflation remain steady around 3% y/y, and investors expect the data to support expectations for a rate cut by the Federal Reserve.

That said, the EUR/USD has halted its streak of four straight days of losses and is trading near 1.0920 in the Asian session on Monday. Traders are also awaiting preliminary Eurozone Q2 Gross Domestic Product (GDP) data, which is due on Wednesday.

The euro, a risk-sensitive currency, could come under pressure due to the scale of geopolitical tensions in the Middle East. On Sunday, Israel’s Defense Minister Yoav Gallant told U.S. Defense Secretary Lloyd Austin that Iran’s military actions appear to be preparing for a full-scale attack on Israel. This action would be in retaliation for the reported assassination of Hamas leader Ismail Haniyeh in the Iranian capital in late July, according to Barak Ravid, editor of Axios.

Regarding the dollar, investors will likely focus on U.S. producer inflation data due Tuesday and consumer inflation figures due Wednesday. Traders are looking for confirmation that price growth remains stable.

Expectations of an interest rate cut by the Fed in September could put pressure on the US dollar, which could support the EUR/USD. According to CME’s FedWatch tool, it indicates a 51.5% chance of a 25 basis point rate cut at next month’s meeting, a considerable increase from the 26% chance recorded last week.

EUR/USD Daily Technical Analysis for August 12th:

The EUR/USD pair remains in a neutral pattern, and a bullish bias would be reinforced if it breaks back above the psychological resistance at 1.1000. On the other hand, according to the behavior on the daily chart, a return to the 1.0820 support zone will be important for the bears to regain control of the trend. Consequently, it is still preferable to sell the currency pair at higher levels.

5

Daily Technical Analysis EUR/USD: The pair moves amid dollar weakness

EUR/USD rose on Tuesday, supported by a broad-based weakening in U.S. dollar bids as U.S. Producer Price Index (PPI) inflation appeared to be cooling faster than expected. Traders continue to await EU Gross Domestic Product (GDP) growth figures, due in early European trading hours on Wednesday. Meanwhile, investors will turn their attention to upcoming U.S. Consumer Price Index (CPI) inflation figures as risk appetite expands in recovery mode.

Eurozone GDP for the second quarter is expected to remain at previous figures of 0.3% quarter-on-quarter and 0.6% year-on-year. Although no change is expected, a sharp deviation in either direction could generate a new round of risk-off selling in Euro markets if the number is low, or reinforce the current bullish stance if growth shows signs of picking up.

U.S. CPI inflation is expected to continue showing signs of cooling in July, with markets anticipating core CPI for the year ending in July to decline to 3.2% from 3.3% last year. Headline CPI is expected to follow the same trend, with median market estimates predicting a decline to 2.9% y-o-y from 3.0% previously.

U.S. PPI inflation fell to 2.2% y-o-y in July, down from the 2.3% estimate and further down from the revised 2.7% in the previous period. Core PPI inflation also fell to 2.4% y-o-y in July, down from an estimated 2.7% and further down from 3.0%. The continued decline in U.S. inflation pressure reinforced risk appetite during the U.S. stock market session, and market bets on a double 50 basis point cut by the Federal Reserve in September increased to 55%, according to CME’s FedWatch tool.

EUR/USD Daily Technical Analysis for August 14th:

Despite recovering on Tuesday, EUR/USD remains stuck below the previous week’s high, just above 1.1000. Bullish momentum may continue to drive intraday price action higher, but technical fragility poses a real risk as EUR/USD struggles to gain long-term traction ahead of the 200-day exponential moving average (EMA) near 1.0820.

6

Daily Technical Analysis EUR/USD: the pair is moving towards the 1.1050 level.

The EUR/USD extended its gains for the second session in a row, touching the 1.1030 level in Asian trading on Monday. The pair’s rise could be the result of increased chances of an interest rate cut in September by the Federal Reserve.

Last week, U.S. economic data showed that retail sales beat estimates, while the Producer Price Index (PPI) and Consumer Price Index (CPI) showed that inflation is on a downward trajectory. Additionally, U.S. housing starts fell nearly 6.8% in the month of July to 1.238 million units, following a 1.1% increase in June, which appears to be the lowest level since 2020. This decline has heightened fears about the resilience of the economy, particularly in light of recent more relaxed reports on inflation and labor.

Federal Reserve Bank of San Francisco President Mary Daly remarked Sunday that the central bank should adopt an approach that is gradual if borrowing costs are to be reduced, according to. Financial Times. Daly expressed her opposition to economists’ concerns that the U.S. economy is close to a sharp slowdown that would justify rapid interest rate cuts.

Similarly, Chicago Fed Board of Governors President Austan Goolsbee said central bankers should be cautious about maintaining a tightening-based policy longer than previously thought. Although it is not known whether the Fed will cut interest rates next month, failure to do so could be harmful to the labor market, according to CNBC.

In Europe, investors expect the European Central Bank to gradually cut interest rates. Monetary policymakers have been hesitant to commit to a new path of rate cuts because they are concerned that price pressures could reaccelerate.

EUR/USD Daily Technical Analysis for August 19th:

The pair is currently trading above the psychological resistance at 1.1000 will serve as support for bull control in the broader trend. Consequently, if gains increase to 1.1060 and 1.1120 levels, technical indicators may move to strong overbought levels. Above those levels, it may be best to sell. On the other hand, according to the behavior on the daily chart, the 1.0820 support level will remain perhaps the most relevant to end the uptrend.

7

Daily Technical Analysis EUR/USD: The Pair Rises Nearly 1% This Week Ahead of Jackson Hole

The most important event this week is the Federal Reserve’s Jackson Hole symposium, where Fed Chairman Jerome Powell is expected to speak publicly on Friday. At the same time, the market will focus on whether expectations of a 100 basis point rate cut by the central bank this year will be confirmed. Another factor that could become more favorable for the Euro and detrimental to the Dollar in the coming days, weeks, and months is the latest developments in the US election polls, which now seem to indicate that the Democratic Party candidate, Kamala Harris, is ahead of former President and Republican Party candidate Donald Trump in several key swing states.

On Tuesday, EUR/USD rose 0.4% and broke above 1.1100 for the first time since December 2023, reaching a new high for 2024. EUR/USD has now been in positive territory for three straight days and appears to be on track for a 1% gain since the market opened on Monday.

Early Thursday, the results of the pan-European Purchasing Managers’ Index (PMI) survey will be released, with the August Eurozone manufacturing and services PMIs expected to hold steady at 45.8 and 51.9, respectively.

Thursday will bring the results of the U.S. Purchasing Managers’ Index (PMI) business activity survey, as well as the start of the annual Jackson Hole Symposium, which will extend through the weekend. The minutes of the Fed’s latest meeting are due to be released on Wednesday, although markets will generally be fully focused on Thursday’s releases, looking for reasons or signals to move the market.

The U.S. manufacturing PMI is expected to hold steady at 49.6 for the month of August, while the services PMI is expected to drop one point to around 54.0 from 55.0. The start of the Jackson Hole Symposium is expected to draw much of investors’ attention on Thursday, although it is worth noting that Friday’s appearance by Fed Chairman Jerome Powell will likely indicate the overall market outlook for the week ahead.

EUR/USD Daily Technical Analysis for August 21th:

EUR/USD has made a new high for 2024, breaking above 1.3050, as markets sell the US dollar in the short term on a general level, rather than for any specific reason related to the single currency’s rise in price. It must be noted that EUR/USD has closed in the green for all but one of the last seven trading days and is in a bullish zone above the 200-day exponential moving average (EMA) at 1.0835.

However, the long-term consolidation range is strong on the technical charts, and a sharp reversal could trigger a move back below 1.1000.