EUR/USD Price Analysis – July 17, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward trend, remaining well-bid around the 1.0937 level and hitting an intraday high of 1.0945.
The upward movement can be attributed to the weakening US dollar, which lost its bullish traction despite better-than-expected Retail Sales data reported by the US Census Bureau for June on Tuesday.
The decline in the US dollar was largely driven by heightened expectations of Fed rate cuts in September.
On the other side, the ECB's stance on interest rates and weakening economic sentiment in Germany are likely to pressure the EUR/USD pair. Expectations of further rate cuts and economic concerns could lead to euro depreciation against the US dollar as investors seek safer assets.
Impact of Fed Rate Cut Expectations and US Retail Sales on EUR/USD
On the US front, the broad-based US dollar has been under pressure recently as market participants expect potential rate cuts by the Federal Reserve starting in September. This sentiment has led US Treasury bond yields to hover around multi-month lows.
Meanwhile, Federal Reserve officials, Chair Jerome Powell and San Francisco Fed President Mary Daly, have suggested that inflation is nearing their target levels, bolstering expectations for forthcoming rate reductions. As a result, traders are factoring in the likelihood of multiple rate cuts before year-end.
In recent economic data, monthly Retail Sales held steady, meeting expectations, as increased sales in core goods offset sluggish demand for automobiles. Moreover, May's sales were upwardly revised to 0.3% from 0.1%.
These figures indicate a resilient consumer sector, supporting the overall economic outlook. However, despite these positive indicators, market expectations for Federal Reserve rate cuts commencing in September remain unchanged.
Therefore, the expectation of Fed rate cuts has weakened the US dollar, benefiting the EUR/USD pair, which has shown resilience amid steady US retail sales and revised upward figures.
ECB Policy and German Economic Sentiment Impact on EUR/USD
On the other side, the European Central Bank (ECB) is anticipated to maintain unchanged interest rates, with investors closely monitoring for hints regarding future rate adjustments.
In June, the ECB shifted away from its previously tight monetary policy stance due to easing inflation concerns stemming from pandemic-related stimulus measures.
Officials foresee inflation stabilizing near 2% by next year, though current pressures may persist into 2023. Market sentiment leans towards two additional rate cuts in 2024.
Meanwhile, Germany's economic sentiment, as gauged by the ZEW Survey, sharply declined to 41.8 in July, reflecting anxieties over weak domestic and international demand, affecting the Eurozone's largest economy.
Therefore, the expected ECB stance and economic sentiment in Germany could pressure the EUR/USD pair, weakening the euro against the US dollar as markets anticipate further rate cuts and economic uncertainties in the Eurozone.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.0904, showing modest upward momentum. The 4-hour chart reveals critical price levels that could influence market direction. The pivot point is set at $1.0932, serving as a key level for potential trend shifts.
Immediate resistance is identified at $1.0923, followed by $1.0940 and $1.0964. These resistance levels indicate potential targets if the price breaks above the pivot point, suggesting a continuation of the bullish trend.
On the downside, immediate support is found at $1.0861, with subsequent support levels at $1.0838 and $1.0817. These levels are crucial for maintaining the current trend and could act as buffers against any sharp declines.
The Relative Strength Index (RSI) is at 61, indicating that the market is in neutral territory but showing signs of upward momentum.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0858, which aligns with the immediate support level, providing additional strength to the current price trend. This EMA acts as a significant indicator of the underlying trend and helps identify potential reversal points.
In conclusion, the outlook for EUR/USD remains bullish above the pivot point of $1.0932. Traders are advised to buy above $1.08940, with an entry price at this level, aiming for a take profit at $1.09323 and setting a stop loss at $1.08722.
EUR/USD is currently trading at $1.0904, showing modest upward momentum. The 4-hour chart reveals critical price levels that could influence market direction. The pivot point is set at $1.0932, serving as a key level for potential trend shifts. Immediate resistance is identified at $1.0923, followed by $1.0940 and $1.0964.
These resistance levels indicate potential targets if the price breaks above the pivot point, suggesting a continuation of the bullish trend.
On the downside, immediate support is found at $1.0861, with subsequent support levels at $1.0838 and $1.0817. These levels are crucial for maintaining the current trend and could act as buffers against any sharp declines.
The Relative Strength Index (RSI) is at 61, indicating that the market is in neutral territory but showing signs of upward momentum.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0858, which aligns with the immediate support level, providing additional strength to the current price trend. This EMA acts as a significant indicator of the underlying trend and helps identify potential reversal points.
In conclusion, the outlook for EUR/USD remains bullish above the pivot point of $1.0932. Traders are advised to buy above $1.08940, with an entry price at this level, aiming for a take profit at $1.09323 and setting a stop loss at $1.08722.
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