Technical Analysis

EUR/USD Price Analysis – Aug 08, 2023

By LonghornFX Technical Analysis
Aug 8, 20233 min

Daily Price Outlook

The EUR/USD currency pair has been facing challenges as it struggles to rise above the 1.1000 level on Tuesday. Investors are worried about a possible recession in the area, which is putting pressure on the pair. However, the decline in EUR/USD currency pair was driven by a recent survey indicating that consumer inflation expectations for the upcoming 12 months dropped to 3.4% in June. Moreover, the strong US dollar was seen as another important factor that weakened the EUR/USD currency pair.

EUR/USD Pair Affected by Mixed Eurozone News and ECB Rate Speculation

According to the latest data, the Eurozone Sentix Investor Confidence showed a slight improvement, moving from -22.5 in July to -18.9 in August. This result was better than what experts had predicted at -23.4. However, it's important not to get too carried away with this positive change. Patrick Hussy from Sentix pointed out that the Eurozone economy is still stuck in a recession. This means we shouldn't think everything is great just because there was a small improvement.

Moreover, Germany's Industrial Production numbers for June dropped by -1.5% compared to expectations of -0.4%. This raised concern and impacted the EUR/USD pair's performance.

Eurozone's Inflation Worries Impact EUR/USD Pair

According to the European Central Bank's survey, people in the Eurozone were still worried about inflation in June. They thought prices would go up by 3.4% in the next year, which is lower than the 3.9% they predicted in May. Looking three years ahead, they expected inflation to be 2.3%, down from 2.5% in May. People also believed that their income wouldn't change much, but they expected to spend less. The outlook for economic growth in the next year got a little better, and expected unemployment in a year remained the same. As a result, the EUR/USD pair dropped to 1.0970, marking a 0.25% decrease.

US Dollar's Focus and Upcoming Economic Indicators for EUR/USD Direction

On the US front, people are paying attention to the US dollar because a Federal Reserve member, Michelle Bowman, said that increasing interest rates could help control inflation. This could make the US dollar stronger and limit gains in the EUR/USD pair.

Furthermore, people will be watching Germany's Consumer Price Index for July on Tuesday, and then the US Consumer Price Index on Thursday. These events will affect the US dollar and show where the EUR/USD pair might go.

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

EUR/USD - Technical Analysis

The EUR/USD pair exhibited marginal upward shifts during the preceding evening, scrutinizing the resistance posed by the EMA50. As we initiate the current trading day, a revitalized bearish sentiment has manifested, characterized by a trajectory aimed at revisiting the 1.0955 level.

This tactical move is congruent with the ongoing preservation of the bearish trend scenario, which persists as a consequence of the observed completion of a double top pattern. This specific pattern instigated a deviation from the previously observed bullish trajectory, subsequently initiating a bearish correction with its ensuing target positioned at 1.0880.

Consequently, we anticipate the continuation of negative market dynamics in the forthcoming trading sessions. However, it is prudent to acknowledge that a breach of the 1.1030 level would serve to mitigate the prevailing downward pressure, potentially redirecting the price towards the primary bullish trend.

The anticipated trading range for the present day is projected to fluctuate within the boundaries of support at 1.0900 and resistance at 1.1040.



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