Technical Analysis

EUR/USD Price Analysis – Aug 03, 2023

By LonghornFX Technical Analysis
Aug 3, 20233 min

Daily Price Outlook

The EUR/USD currency pair is still going down, making it the fourth day in a row that it's been falling. On Thursday, the pair is hovering very close to its lowest point since July 7th. However, the main reason for this ongoing fall can be attributed to the fact that a lot of people in the market expect the Federal Reserve (Fed) to raise interest rates soon. This expectation has made the US Dollar (USD) worth more, reaching its highest value in four weeks. All these things combined are making it hard for the EUR/USD pair to recover and go up again.

Fed's Influence and Dollar's Resilience

The US Dollar is still doing well and is close to its highest value in four weeks compared to the Euro. This is happening because many people expect the Federal Reserve to make its rules stricter. This is influenced by the good news about jobs in the US, like the recent ADP jobs report, which shows that the economy is strong. As a result, the Fed might keep interest rates higher for a longer time. This confidence makes the interest rates on US government bonds go up, which helps the Dollar.

When they do that, the interest rates on US government bonds stay high too, which helps the Dollar stay strong. As a result, the exchange rate between the Euro and the US Dollar (EUR/USD) is feeling pressure because the strong Dollar makes it more expensive to buy Euros.

ECB's Uncertainty and Data-Driven Approach: Potential Impact on EUR/USD Pair

ECB President Christine Lagarde recently mentioned in an interview with Le Figaro that no decisions have been finalized for the upcoming September 14 meeting. She highlighted that the central bank's actions will depend on the latest economic and financial data. This follows the Euro Zone's headline inflation slowing to 5.3% YoY in July from 5.5% before, though core inflation remained steady at 5.5%.

This uncertainty and data-driven approach could impact the EUR/USD pair, potentially adding to its ongoing fluctuations as traders assess the ECB's upcoming moves based on economic indicators.

EUR/USD Price Chart – Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

EUR/USD - Technical Analysis

EUR/USD has successfully reached its first negative target at 1.0935, and there are indications of further downward movement in the upcoming sessions, potentially leading to the next significant target at 1.0835.

As we closely monitor the intraday levels, the 50 SMA is exerting negative pressure on the pair. However, there is a possibility of a potential reversal if EUR/USD manages to pierce through the resistance levels at 1.0955 and 1.0990, effectively halting the current downward trend and steering the pair back into the ascending channel.

For today's trading, we anticipate the EUR/USD to move within the trading range of support at 1.0840 and resistance at 1.1000. As per our analysis, the expected trend for today remains bearish.



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