EUR/USD Price Analysis – July 17, 2023

Daily Price Outlook

The EUR/USD continues to experience upward momentum, with the intraday bias remaining positive. The ongoing rise from 1.0634 is expected to lead to a retest of the 1.1094 high.

As the focus shifts to US Retail Sales data, the EUR/USD has exhibited volatile trading above the key resistance level of 1.1200. Market participants are eagerly awaiting the release of US Retail Sales figures for June, which has resulted in sideways movement for the currency pair.

Caution among investors is reflected in the losses seen in S&P500 futures during the Tokyo session, as the second-quarter earnings season begins. Concerns over the Federal Reserve's more aggressive policy tightening and strict credit standards in the retail banking sector have weighed on US stocks. This has led to speculation that corporate earnings may remain volatile in the coming period.

With Eurozone inflation at record highs, the European Central Bank (ECB) is expected to conclude its rate-hiking cycle after July. The Euro has gained significant strength, particularly as core inflation, excluding volatile food and oil prices, stands at 5.4%, surpassing the ECB's target of 2%.

However, economists at Nordea suggest that the ECB still sees a need for caution and tightening measures. While another rate hike in July seems likely, it is expected to be the final one in the current cycle.

EUR/USD - Technical analysis

The EUR/USD pair is currently trading in a sideways manner within a tight range, as indicated on the chart. It is noteworthy that the stochastic indicator is showing signs of improvement, hinting at a potential shift towards positive momentum.

This positive momentum could potentially support the continuation of the main bullish trend, with the next target set at 1.1275.

Hence, our previously optimistic outlook remains intact and valid for the near future, with the support of the EMA50. It should be noted that surpassing the targeted level may extend the bullish wave towards 1.1418.

However, if the price breaks below 1.1200, a temporary intraday bearish correction may occur before the upward movement resumes.