Double Bottom Support Breakout
The EUR/USD was closed at $1.1737 after placing a high of $1.1769 and a low of $1.1734. EUR/USD continued its bearish streak for the 8th consecutive session on Monday and dropped to its lowest since the ending week of March amid the strength in the U.S. dollar. On Monday, the greenback strengthened against its rival currencies during American trading hours after JOLTS jobs opening data release. The stronger than expected data figures added further strength to the already rising U.S. dollar and dragged EUR/USD pair further on the downside towards its fresh four-month lowest level.
The U.S. Dollar Index that measures the greenback's value against the basket of six major currencies reached 92.99 level on Monday during the last trading hours as the U.S. Treasury Yields on benchmark 10-year note jumped to its highest since July 16 at 1.319% and added strength in the greenback. The combination of higher yields and rising DXY and the better-than-expected jobs figure pushed the U.S. dollar towards 93 levels, which ultimately negatively impacted EUR/USD.
On the data front, at 11:00 GMT, the German Trade Balance in June remained flat with the expectations of 13.6B. At 13:30 GMT, the Sentix Investor Confidence dropped in August to 22.2 against the forecasted 29.2 and weighed on the single currency Euro that added further loss in EUR/USD. From the U.S. side, at 19:00 GMT, the JOLTS Job Openings for June rose to 10.07M against the anticipated 9.27M and supported the U.S. dollar that dragged EUR/USD pair on the downside.
Meanwhile, the Fed officials were also discussing reducing the monetary support as one of the two targets set by the Fed for this action was achieved, and the other one was in progress. The Fed Reserve President Raphael Bostic said that he would be looking at the economic recovery till the fourth quarter before tapering the asset purchases. The Richmond Fed President Tom Barkin said that the inflation target had been reached and the job market was improving, which means the Fed will soon start increasing interest rates. These hawkish comments also added strength to the U.S. dollar and dragged EUR/USD currency pair further on the downside.
Moreover, the ECB policymaker Jens Weidmann said that the European Central Bank must tighten monetary policy to counter inflationary pressures. European countries have increased their borrowing to cope with the coronavirus pandemic, which exposed them to increased debt servicing costs. Weidmann said that ECB would have to act in line with the price stability objective to make inflation sustainable. These comments from ECB policymakers added further weakness in single currency Euro that dragged EUR/USD pair further on the downside.
EUR/USD Intraday Technical Levels
Support Resistance
1.1725 1.1760
1.1712 1.1782
1.1690 1.1794
Pivot Point: 1.1747
EUR/USD - Technical Outlook
The EUR/USD is trading bearish, disrupting the narrow trading range of 1.1769 – 1.1741 level. The EUR/USD pair has entered the oversold zone, as we can see on the 4-hour timeframe. However, the stronger dollar continues to dominate the selling bias in EUR/USD pair. The pair has already violated the double bottom support level of 1.1765 level, and the closing of candles below this level supports selling bias in EUR.
The EUR/USD's immediate resistance holds around 1.1741 level, and blow this; the pair is exposed towards the next support area of 1.1705 level. The 50 SMA and MACD are supporting a selling trend in the EUR/USD pair today. All the best.
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