Daily Price Outlook
During the Asian trading session, the EUR/USD pair is hovering around the 1.0950 mark, a reflection of market ambiguity while traders keenly await Fed Chairman Jerome Powell’s speech for further insights into interest rate decisions.
S&P500 futures are witnessing minor losses in Asia, although US stocks maintained their bullish trajectory on Tuesday, driven by US Durable Goods Orders that outperformed expectations. This uptick in Durables demand hints at a possible revival in the somewhat sluggish manufacturing industry.
The US Census Bureau data showed that Durable Goods Orders grew by 1.7%, contradicting the anticipated 1% shrinkage. The May Durables numbers surpassed April’s 1.2% figure, with data excluding defense orders indicating a 3.0% growth against a forecast of a flat performance.
With the backing of robust US Durables figures and an increasingly likely restart of Fed policy tightening, the US Dollar Index (DXY) aims to push its recovery beyond 102.62.
The CME Fedwatch tool reveals an approximate 77% chance of a 25 basis point increase in interest rates to between 5.25 and 5.50%.
Conversely, the Euro experienced notable movement on Tuesday in response to a hawkish address by European Central Bank (ECB) President Christine Lagarde at the ECB forum of Central Banking.
Acknowledging soaring inflation in the Eurozone, Lagarde underscored the necessity for adequately strict monetary policies to mitigate price pressures and highlighted the recent escalation of inflation impact due to wage growth.
In the meantime, alarm bells are ringing over a potential deepening of Germany’s economic recession as the business sentiment has fallen for the second successive month.
The Ifo Institute reported a decline in the business climate index from 91.5 in May to 88.5 in June.
Investors should also be aware that the German economy is officially in a recession, as indicated by back-to-back quarters of shrinking Gross Domestic Product (GDP) figures.
EUR/USD Price Chart – Source: Tradingview
EUR/USD – Technical Analysis
In an exciting twist, the EURUSD pair has boldly leapfrogged the 1.0940 level and ended the day above it. This move has fortified our bullish expectations for the upcoming trading sessions and paves the way for the pair to journey towards the next upbeat stop at 1.1075.
As the pair has charted an inverted head and shoulders pattern, we remain bullish on both intraday and short-term projections.
However, we’d like to strike a note of caution: if the pair breaks below the 1.0940 level, it could find itself under a dark cloud of negative pressure, potentially dragging it down to test the 1.0860 area before it can bounce back up.
Today’s trading range is expected to oscillate between the 1.0880 support and the 1.1040 resistance.
Overall, we are feeling bullish about today’s trend. It’s going to be an interesting ride!
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