Unemployment Claims in Focus!
The EUR/USD closed at $1.1789 after placing a high of $1.1839 and a low of $1.1782. EUR/USD extended its loss for the second consecutive session on Wednesday amid the strength in the U.S. dollar and the prevailing risk-off market sentiment. The currency pair EUR/USD dropped to its lowest in three-month at 1.1782 after the U.S. dollar resumed its advance on Wednesday. During early trading hours, the currency pair remained under pressure; however, after the release of FOMC meeting minutes, the pair finally found some ground and settled at around 1.1800 level.
The minutes released from the committee of the Federal Reserve showed that the policymakers were still committed to achieving substantial further progress towards their goals of economic recovery before changing the pace of the current monetary policy. At the same time, many members believed that the risks to their inflation expectations were tilted to the upside. After the release of U.S. Federal Reserve meeting minutes from June, the U.S. Treasury yields on benchmark 10-year note fell below 1.30% to its more than 4-months lowest level. However, the U.S. dollar remained green for the day as DXY reached 92.84 level amid the risk-off sentiment prevailing in the market.
On the data front, at 11:00 GMT, the German Industrial Production for May dropped to -0.3% against the forecasted 0.5% and weighed on the single currency Euro that added further loss in EUR/USD pair. At 11:45 GMT, the French Trade Balance declined to -6.8B against the projected -6.0B and weighed on the single currency Euro and dragged EUR/USD pair further on the downside. At 13:00GMT, the Italian Retail Sales fell to 0.2% against the anticipated 3.1% and weighed on the single currency Euro and kept the currency pair EUR/USD under pressure for the day.
From the U.S. side, at 19:00 GMT, the JOLTS Job Openings dropped to 9.21M against the estimated 9.30M and weighed on the U.S. dollar that limited the fall in EUR/USD. At 19:01 GMT, IBD/TIPP Economic Optimism declined to 54.3 against the anticipated 57.3, which weighed on the U.S. dollar and capped further loss in EUR/USD.
The single currency Euro failed to stage a recovery against the U.S. dollar on Wednesday as the data released from Euro-area was not in favor of the currency for the day. Furthermore, the prevailing risk-off market sentiment driven by the uncertainty in the market related to the Delta variant of the coronavirus also kept the riskier currency under pressure, and hence, EUR/USD suffered more during Wednesday’s trading session.
Furthermore, the European Commission said that the economic outlook has improved for the Eurozone since its previous forecast in May.
However, the pandemic was not over yet, and the new variants still pose a risk. In its updated economic forecast, the European Commission predicted the EU and Eurozone expansion at 4.8% and 4.5% in 2022, respectively. The previous projection in May suggested a 4.2% growth rate for the bloc while 4.2% for the Eurozone. The Commission expected that the real GDP would return to pre-pandemic levels in the fourth quarter of this year, despite the risks of pandemic remains.
EUR/USD Intraday Technical Levels
Support Resistance
1.1767 1.1824
1.1746 1.1860
1.1710 1.1882
Pivot Point: 1.1803
EUR/USD - Technical Outlook
The EUR/USD is trading with a bearish bias at the 1.1798 level. The EUR/USD pair has violated the symmetrical triangle pattern supporting the pair at the 1.1837 level. At the moment, the same support level is extending resistance to the EUR/USD currency pair. On the downside, the immediate support prevails at the 1.1780 level, and the bearish breakout of this level can expose the EUR/USD price further lower towards the 1.1736 level. The MACD is holding in a selling zone. Therefore, the pair is facing bearish pressure. Later today, the investor’s focus will remain on the U.S. Jobless claims figures as these have the potential to drive price action in the market. All the best!
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