EUR/USD Price Analysis – Aug 1, 2023

Daily Price Outlook

The EUR/USD currency pair is still facing challenges as it struggles to maintain its position above the 1.1000 mark on Tuesday. However, this decline can be attributed to fresh hints from the European Central Bank (ECB) President Christine Lagarde about a possible pause in interest rate hikes in September. Although the ECB recently raised rates by 25 basis points to 4.25%, there are signs of easing inflationary pressures and growing concerns about a recession.

Market players are anxiously waiting for the US Manufacturing Purchasing Managers Index (PMI) data, as it could provide fresh insights and influence the market's direction. The pair's downward trend continues, keeping the market uncertain.

Mixed Economic Data from Europe and the US Impact EUR/USD

Furthermore, the previosly released economic data from Europe and the US is also impacting the EUR/USD pair. In the Eurozone, the Core Harmonized Index of Consumer Prices (HICP) for July rose by 5.5% YoY and 5.3% for the headline CPI. In the meantime, the flash Q2 Eurozone Gross Domestic Product (GDP) expanded by 0.3% QoQ and 0.6% YoY. German Retail Sales for June increased by 1.6% YoY, but the monthly figure fell by -0.8%, worse than expected.

In the US, the PCE Price Index for June grew at a slower rate of 3% compared to May's 3.8%. Despite these mixed indicators, the US Dollar remains strong, which was seen as another key factor that kept the EUR/USD currency pair under pressure.

Market Focus on Upcoming Economic Data

Looking forward, the market participants are monitoring the global Manufacturing PMI data and the German Unemployment rate for June. However, the upcoming US Nonfarm Payrolls report, scheduled for Friday, will be a significant highlight of the week.

The focus on these crucial economic data releases in both the US and Europe will put the data-dependent approach of the Federal Reserve and the European Central Bank (ECB) to the test when making decisions on interest rates.

EUR/USD - Technical Analysis

The EUR/USD pair is currently at an intriguing juncture as it approaches the crucial resistance level at 1.1055. Interestingly, we observe a calm decline from this resistance point, and the pair is now hovering near the primary support line of a bullish channel.

Adding to the excitement, the chart reveals the price staying below the neckline of a double top pattern, while the EMA50 exerts its influence with negative pressure. Moreover, the stochastic indicator is signaling a negative overlap, adding further intrigue to the mix.

In light of these compelling factors, our forecast leans towards a bearish bias in the upcoming trading sessions. This prompts us to set our initial targets on breaking the support line of the bullish channel.

Should this support be breached, it may potentially pave the way for further declines, with potential targets at 1.0935, followed by 1.0835 once the previous level is surpassed.

However, we must remain alert to the possibility of a game-changer, as breaching the 1.1055 resistance level would invalidate the bearish scenario, leading the price to potentially resume its main bullish trajectory, and setting sights on the 1.1170 areas as the initial target.

Today's trading session promises excitement within the range of 1.0920 support and 1.1070 resistance, keeping traders on their toes and providing ample opportunities for strategic moves.