EUR/USD Price Analysis – Aug 17, 2023

Daily Price Outlook

Despite the upbeat Eurozone data, the EUR/USD currency pair failed to stop its past five-day losing streak and remained well offered around the 1.0863 level. This marked a 0.14% decline for the day. The Euro's struggle to gain traction came despite positive economic indicators in the Eurozone, likely due to lingering uncertainty about future economic growth and inflation.

Meanwhile, the US dollar continued to show strength, exerting downward pressure on the EUR/USD pair. Hence, the combination of upbeat US data and the potential for further tightening measures from the Federal Reserve remains the driving force behind the strength of the US Dollar.

Positive Eurozone Data Fails to Lift Euro Amid Growth and Inflation

According to the latest updates, Eurozone's second-quarter Gross Domestic Product (GDP) matched expectations, showing a 0.3% growth and 0.6% increase YoY. Good news also came from June's Industrial Production, which improved by 0.5% compared to an expected -0.1%. This positive trend continued as Industrial Output rose by 0.5%, defying the predicted 0.1% drop.

Earlier this week, the Eurozone ZEW Survey for August indicated better economic sentiment at -5.5, surpassing the estimated -12 and the previous -12.2. Germany's ZEW Survey for August also improved to -12.3, beating expectations. Despite these positive signals, the Euro struggled against other currencies due to lingering doubts about economic growth and inflation.

US Dollar Gains Momentum Amid Positive Data and Fed Tightening Speculations

Furthermore, the US Dollar's strength is mainly being driven by positive data and the potential for the Federal Reserve (Fed) to tighten its policies further. Notably, US Industrial Production saw a 1.0% increase in July, beating the expected 0.3% rise and the previous 0.8% drop. Building Permits also went up to 1.44 million, and Housing Starts jumped to 1.45 million from June's 1.39 million, surpassing the projected 1.48 million.

These better-than-expected figures contributed to the USD's strength. Moreover, the recent Federal Open Market Committee (FOMC) Minutes highlighted concerns about persistently high inflation. Fed officials recognized notable inflation risks and discussed potential additional monetary policy tightening to bring inflation in line with targets. In light of these developments, the Euro struggled against the US Dollar, creating a challenge for the EUR/USD pair.

EUR/USD - Technical analysis

In a comprehensive assessment of gold's market trajectory, the precious metal has demonstrated a pronounced downturn, successfully reaching our initial anticipated benchmark at $1892.00. Currently, gold is exerting pressure on this level, aiming to validate its break beneath it. This augments the likelihood of persisting in a bearish trend, with potential descent aiming towards the subsequent target of $1873.50.

In light of these dynamics, our outlook remains bearish for the foreseeable horizon, underscored by the downward impetus provided by the 50-Day Exponential Moving Average (EMA50). It is paramount to observe that any breach of the $1905.00 level, succeeded by the $1913.15 benchmark, would arrest the anticipated decline, potentially pivoting the metal's trajectory towards an ascent.

For the day's trading landscape, we project gold's valuation to oscillate between a support threshold of $1875.00 and a resistance cap of $1905.00.