Daily Price Outlook
EUR/USD is facing downward pressure as it remains below the critical 1.1000 level, vulnerable to modest USD strength. The pair retreated from its four-day peak around 1.1040, reacting to disappointing US NFP figures on Friday. During the Asian session, EUR/USD slipped below 1.1000, with a temporary halt to its two-day recovery from the 100-day SMA, near the recent one-month low reached last Thursday.
The US Dollar gains support as market sentiment leans towards the Federal Reserve maintaining its hawkish stance. July's nonfarm payroll report showed an addition of 187K jobs, signaling weakening demand for workers despite steady wage growth and an unexpected decline in the unemployment rate. This keeps the door open for the Fed to raise interest rates by another 25 basis points in September or November, boosting the USD and exerting pressure on EUR/USD.
Conversely, the European Central Bank (ECB) is expected to end its nine straight interest rate increases amid indications that underlying inflation in the Euro Zone has peaked. Fitch Ratings suggests that the peak in ECB rates is imminent due to declining Euro Zone inflation. The ECB's economic report released on Friday highlighted that the region's underlying inflation likely peaked during the first half of 2023, adding to the negative sentiment surrounding EUR/USD.
The upcoming US CPI report on Thursday will have a significant impact on market expectations for future rate hikes and USD demand. In the meantime, macroeconomic data for the Euro Zone, including German Industrial Production and Sentix Investor Confidence, will provide guidance for traders. The USD's performance will depend on comments from several FOMC members, as there are no major US economic releases scheduled at present. Policy-related remarks could create short-term opportunities for traders, but given the current landscape, a bearish outlook for EUR/USD remains the prevailing trend.
EUR/USD - Technical Analysis
The EURUSD pair's upward march was halted at the 1.1030 level, which corresponds to the disrupted neckline of the double top pattern, as depicted on the chart. It's noteworthy that the price has begun to display a bearish rebound from this juncture, indicating a potential return to the correctional bearish wave and setting negative targets down to 1.0880.
Hence, we anticipate further bearish propensity in the forthcoming trading sessions, reinforced by the clear negativity exhibited by the Stochastic Oscillator. However, it should be noted that a breach of the 1.1030 level could interrupt the projected decline and steer the price back to the primary bullish trend.
Today's expected trading range lies between the 1.0900 support and 1.1050 resistance levels.
The predicted market trend for today is bearish.
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