EUR/USD Price Analysis – July 19, 2023

Daily Price Outlook

The upward momentum in EUR/USD continues, with the intraday bias favoring further gains. The ongoing rise from 1.0634 is expected to lead to a retest of the 1.1094 high. A decisive breakout above this level would signal the continuation of the larger upward trend from 0.9534 to 1.1273, based on Fibonacci levels.

EUR/USD experiences a pullback from the 1.1280 resistance as the divergence between the European Central Bank (ECB) and the Federal Reserve (Fed) becomes uncertain. Prior to Wednesday's European trading session, the currency pair declined from its recent peak, settling around 1.1220.

This decline can be attributed to both a corrective bounce in the US Dollar and concerns surrounding the ECB's actions amid volatile market conditions.

Bloomberg reports that ECB officials are facing difficulties in forecasting the central bank's future actions, particularly in explaining the rate hike in July.

Policymakers hold different perspectives, and striking the right balance between signaling further hikes and signaling a pause proves to be a challenge.

In contrast, a recent Reuters poll suggests that the anticipated 25 basis point rate hike by the Fed in July will likely be the final one in the current tightening cycle. However, positive June results from the US Retail Sales Control Group indicate the possibility of further interest rate increases by the Fed.

The US Dollar Index (DXY), which had previously recovered from a 15-month low near 99.55, has seen a modest increase to around 100.05, supported by these expectations.

Eurozone inflation data for June and US housing market indicators for the same month, along with other risk factors, may influence Euro traders in the near term.

EUR/USD - Technical analysis

The EUR/USD pair is currently consolidating within a sideways pattern, as depicted on the chart. It is noteworthy that the stochastic indicator is displaying positive momentum and entering the positive zone, potentially signaling a resumption of the bullish trend. Our primary target for the upward movement remains at 1.1418.

Consequently, our outlook for the immediate future continues to favor a bullish trend. Nevertheless, it is essential to remain mindful that a breach below the 1.1200 level may trigger a corrective bearish phase, with initial targets at 1.1170 and further extending to 1.1105, before any subsequent attempt to rally.

The anticipated trading range for today is projected to lie between the support level at 1.1170 and the resistance level at 1.1310.