EUR/USD Price Analysis – July 10, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has shown strength in recent sessions, maintaining gains above the 1.0821 and reaching an intra-day high of 1.0826. However, the reason for its upward trend can be linked to the cautious stance of Federal Reserve Chair Jerome Powell, which has weighed on the US Dollar.
Simultaneously, positive political developments in Europe, including the defeat of Marine Le Pen’s far-right National Rally in the French elections, have bolstered the Euro. This outcome signals political stability, easing fears and supporting the Eurozone economically.
Impact of Powell's Cautious Remarks on US Dollar and Euro Strength
Jerome Powell's recent comments about the US labor market have had a significant impact on the US Dollar's performance against major currencies like the Euro. He pointed out a noticeable slowdown in current labor market conditions compared to previous years, indicating a deceleration in economic momentum.
This cautious assessment implies that the Federal Reserve might postpone or adopt a more restrained approach to interest rate cuts, diverging from earlier market anticipations of aggressive monetary easing.
Following Powell's remarks, the US Dollar Index (DXY), which gauges the Greenback's strength against major currencies, encountered selling pressure. Investors perceived Powell's comments as indicating that the Fed might hold off on rate cuts unless there's clear evidence of easing inflationary pressures.
Hence, Jerome Powell's cautious remarks on the US labor market led to selling pressure on the US Dollar, impacting the EUR/USD pair. The Euro strengthened as investors anticipated a more restrained approach to rate cuts by the Federal Reserve.
Political Stability in France Boosts Euro Against US Dollar
On the other side, the shared currency has also found support from domestic political developments within the Eurozone, particularly in France. The failure of Marine Le Pen’s far-right National Rally to secure an absolute majority in the French elections has eased concerns about a potential widening of the French financial crisis.
Despite leading in the initial round, the party’s inability to form a majority government has reduced fears of political instability that could have impacted the Euro's value negatively.
Investors welcomed the outcome as it signaled a probable coalition government between President Emmanuel Macron's centrist alliance and the left wing, led by Jean-Luc Mélenchon. This political configuration is viewed favorably by markets due to expectations of continued policy stability and fiscal responsibility.
EUR/USD - Technical Analysis
The Euro (EUR) has displayed limited movement against the US Dollar (USD) in the latest session, currently trading at $1.08156. This price action comes amid a cautious market environment, with traders eyeing the pivot point at $1.08186, which coincides with the 50-period Exponential Moving Average (EMA).
This level serves as a crucial juncture, indicating potential support or resistance depending on the directional movement.
Immediate resistance for the EUR/USD pair is noted at $1.08307, with additional resistance levels at $1.08332 and $1.08453.
These levels represent significant barriers for any upward momentum. On the support side, immediate support is found at $1.08181, with subsequent support levels at $1.07990 and $1.07993, providing a safety net against downward pressure.
The Relative Strength Index (RSI) is currently at 46.96, suggesting a slightly bearish sentiment as it lies below the neutral 50 mark. This indicates that the pair might face selling pressure in the near term.
The 50 EMA at $1.08186 acts as a critical support level, and a breach below this could trigger further downside movement.
Traders should consider entering a sell position below $1.08177, targeting a take profit at $1.07990 with a stop loss set at $1.08307.
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