Fibonacci Retracement in Play
The EUR/USD closed at $1.1822 after placing a high of $1.1896 and a low of $1.1806. EUR/USD continued its bearish momentum and dropped for the 5th session in the previous seven sessions. The declining prices of the EUR/USD could be attributed to the strength of the U.S. dollar for the day along with the weak Euro amid dismal economic data. On Tuesday, the U.S. Dollar Index measures the greenback value against the basket of six major currencies to 92.66 level falling to 92.0 level on the day. The investors remained optimistic about the ongoing economic recovery from the coronavirus pandemic as U.S. President Joe Biden refused to veto his $1.2 trillion bipartisan infrastructure bill even if the separate democratic spending plan of $6 trillion did not pass the Congress.
The U.S. dollar remained strong across the board on Tuesday despite the poor-than-expected macroeconomic data and falling U.S. Treasury Yields. The U.S. Treasury yields on benchmark 10-year note fell to their lowest level since the ending week of February at 1.34%. On the data front, at 11:00 GMT, the German Factory Orders for May dropped to -3.7%against the expected 0.9% and weighed on single currency Euro that added further loss in EUR/USD pair. At 14:00 GMT, the ZEW Economic Sentiment for July dropped to 61.2 against the forecasted 79.0 and weighed on Euro that added further downward momentum in EUR/USD.
The German ZEW Economic Sentiment also declined in July and reached 63.3 against the predicted 75.0 and weighed on Euro, which added further loss in the EUR/USD pair. In May, the Retail Sales rose to 4.6% against the anticipated 4.3% and supported Euro that ultimately limited the downward pressure on EUR/USD pair. On the U.S. front, at 18:45 GMT, the Final Services PMI remained flat with the projections of 64.6. At 19:00 GMT, the ISM Services PMI declined to 60.1 against the anticipated 63.4 and weighed on the U.S. dollar, limiting the declining trend in EUR/USD pair.
The pressure surrounding the European currency increased after the release of the German and Euroland ZEW Economic Sentiment, which showed a weaker than expected future economic activity. The weak outlook for the Eurozone economy could be attributed to the rising number of cases across the region with the spread of the Delta variant of coronavirus. Europe has accelerated its vaccination rollout to fight the fast pace of Delta variant spread. However, it has not re-imposed restrictions that alarmed the investors and raised their fears about the economic recovery from the pandemic. This added weight on the Euro currency, and hence, the EUR/USD pair continued declining on Tuesday.
EUR/USD Intraday Technical Levels
Support Resistance
1.1786 1.1876
1.1752 1.1930
1.1697 1.1965
Pivot Point: 1.1841
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EUR/USD - Technical Outlook**
The EUR/USD is trading with a bullish bias at the 1.1833 level. The EUR/USD pair has formed a double bottom pattern that’s extending support at the 1.1808 level on the hourly timeframe. The closing of candles above this level supports a strong buying trend in the EUR/USD pair. The direct currency pair has the potential to soar until the next resistance area of 1.1842 level that’s being extended by a 38.2% Fibonacci retracement level. On the higher side, the violation of the 1.1842 level can expose the EUR/USD pair towards the 1.1862 (61.8% Fibo) level. The MACD is holding a selling zone, but the recent histograms are smaller than the previous ones. This demonstrates that the bears are getting exhausted, and bulls are looming around the corner. All the best!
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