Technical Analysis

EUR/USD Analysis – July 26, 2021

By LonghornFX Technical Analysis
Jul 26, 20214 min

German IFO Business Climate

The EUR/USD was closed at $1.1771 after placing a high of $1.1788 and a low of $1.1753. EUR/USD remained flat throughout the day on Friday and put minor losses as the U.S. dollar was strong across the board, and the risk-off market sentiment also added further pressure on riskier currency pairs.

The U.S. Dollar Index was high onboard above 93.0 level and kept the greenback strong against its rival currencies. The investors were awaiting the Fed decision in its upcoming FOMC meeting scheduled on Tuesday and Wednesday. While the single currency Euro remained unchanged as the latest monetary policy decision from ECB failed to trigger any significant momentum in the shared currency.

As widely anticipated, the European Central Bank maintained its interest rates at the current level, whereas policymakers reaffirmed that PEPP would continue to run faster. Christine Lagarde said that the economy of Europe was on track for solid growth in Q3 but added that the coronavirus Delta variant could weigh on the recovery in services. At the same time, the bottlenecks could also affect the manufacturing sector in the short term.

On the data front, at 12:15 GMT, the French Flash Manufacturing PMI in July remained flat with the expectations of 58.1. The French Flash Services PMI dropped in July to 57.0 against the projected 58.7 and weighed on the single currency Euro and added loss in EUR/USD. At 12;30 GMT, the German Flash Manufacturing PMI rose to 65.6 against the forecasted 64.2 and supported the single currency Euro and capped further loss in EUR/USD.

German Flash Services PMI surged to 62.2 against the predicted 59.4 and supported the single currency Euro and limited the downward momentum in EUR/USD. At 13:00 GMT, the Flash Manufacturing PMI remained flat with the expectations of 62.6. The Flash Services PMI from the whole bloc surged to 60.4 against the forecasted 59.4 and supported the single currency Euro and reduced loss in EUR/USD.

From the U.S. side, at 18:45 GMT, the Flash Manufacturing PMI for July rose to 63.1 against the estimated 62.0 and supported the U.S. dollar that added further downward momentum in EUR/USD. The Flash Services PMI declined to 59.8 against the predicted 64.6 and weighed on the U.S. dollar and further caped loss in EUR/USD.

Meanwhile, the riskier currency pair EUR/USD remained under pressure on Friday amid the prevailing risk-off market sentiment. The rising spread of the most contagious Delta variant of the coronavirus throughout the world raised fears about the slow economic recovery. Many countries re-imposed lockdown measures to stop the spread of the delta variant of coronavirus.

According to WHO, the variant has now become the most dominant variant globally, reportedly being spread to more tan1 24 countries. The U.S. health officials also confirmed that 80% of the new coronavirus cases were caused by the delta variant in the United States. France also began requiring proof of vaccination or negative COVID-19 test reports as an entry pass for cinemas, bars, restaurants, etc. The increased risk-off market sentiment kept the riskier currency pair EUR/USD under pressure throughout the trading session.

EUR/USD Intraday Technical Levels

Support Resistance

1.1770 1.1778

1.1766 1.1782

1.1762 1.1786

Pivot Point: 1.1774

EUR/USD - Technical Outlook

The technical side of the EUR/USD hasn't changed a lot as the EUR/USD pair consolidates in a narrow trading range of 1.1800 – 1.1750 level. The direct currency pair EUR/USD has crossed above 50 SMA (simple moving average) on the hourly chart, which's now supporting the pair at the 1.1775 level. At the same time, the triple top pattern is providing resistance at 1.1786 and 1.1823 levels. A bullish breakout of 1.1786 level can expose the EUR/USD price towards the next resistance level of 1.1825. The support continues to hold at the 1.1750 level, and a breakout of 1.1786 support level exposes the EUR/USD price towards the 1.1760 level today. Let's wait for the German ifo Business Climate to predict further EUR/USD pair trends. All the best!


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