EUR/USD Price Analysis – July 06, 2023

Daily Price Outlook

EUR/USD currency pair has managed to stop its previous downward rally and shown strength during the Asian session on Wednesday. However, the reason for its upward rally can be attributed to a more hawkish stance adopted by the European Central Bank (ECB).

In their recent statements, they expressed anticipations of raising interest rates at both the July and September meetings. Thus, this stance has provided support to the shared currency, resulting in a modest boost to the EUR/USD pair.

ECB Takes Cautious Stance, Plans Interest Rate Hikes Amid Lingering Inflation

As mentioned above, European Central Bank (ECB) officials showed a more cautious approach, indicating that they plan to increase interest rates in both July and September.

ECB President Lagarde mentioned that inflation has entered a new phase, and it may persist for a while. These remarks were seen as a key factor that has boosted the EUR/USD currency pair.

Fed Maintains Cautious Approach Amid Economic Uncertainties

Apart from ECB, Federal Reserve is being careful about their plans. They mentioned the possibility of increasing borrowing costs later this year, but they don't want to lower rates anytime soon. Their main concern is making sure inflation stays around 2% in the medium term.

Lately, some economic data in the US hasn't been very strong, like the PCE Price Index and ISM PMI. This has made people wonder if the Fed can keep raising interest rates. Investors are eagerly waiting for the release of the June FOMC meeting minutes to get an idea of what the Fed might do next.

Hence, the cautious outlook of the Federal Reserve will likely have an impact on the EUR/USD currency pair. If the Fed maintains a cautious stance and indicates a slower pace of interest rate increases, it may lead to a weakening of the US dollar. This could potentially strengthen the euro against the dollar, causing the EUR/USD currency pair to rise.

Market Focus on FOMC Minutes and Euro Zone Data

Looking forward, investors are waiting for the release of the June FOMC meeting minutes, as it will impact the near-term USD price and the EUR/USD pair. On the flip side, the final Services PMI and Producer Price Index (PPI) data are also important, but they may not strongly influence the currency pair's direction.

EUR/USD Price Chart – Source: Tradingview

EUR/USD - Technical analysis

The EURUSD pair kicked off the trading session today with a noticeable bearish tone, breaking the intraday bullish trend line and hinting at a potential slide throughout the day.

Our initial target for this downward move is around 1.0745, but keep a close eye on that level—it's a key point to watch. If the price manages to break below 1.0745, we might witness an extension of the bearish momentum, setting our sights on the 1.0630 area as the next major support level.

So, for today, we're leaning towards a bearish bias, and the fact that the price is trading below the EMA50 supports this view. However, it's worth noting that if we see a breakthrough above 1.0870, it could invalidate the negative scenario and potentially revive the main bullish trend.

In terms of the expected trading range, we anticipate it to fluctuate between the support level of 1.0730 and the resistance level of 1.0875.

All in all, the forecast for today's trend in the EURUSD pair points to a bearish outlook. So buckle up and let's see how the market unfolds!