EUR/USD Price Analysis – July 20, 2023

Daily Price Outlook

The EUR/USD pair experienced a slight decline, reaching a low of 1.1173, but ultimately finished the day just below the 1.1200 level. The Euro managed to hold above 1.1200 for most of the morning, partly supported by European statistics.

The Eurozone's Harmonized Index of Consumer Prices (HICP) for June showed a year-on-year increase of 5.5%, in line with expectations. However, annual inflation in the European Union decreased from 7.1% in May to 6.4% in June.

Despite less-than-promising macroeconomic data from the US, financial markets maintained a sense of optimism during the American session. Building permits in June declined by 3.7%, while housing starts dropped by 8%.

The EUR/USD pair continued its pullback from the 1.1280 resistance level, reflecting the uncertain divergence between the European Central Bank (ECB) and the Federal Reserve (Fed).

Prior to Wednesday's European trading session, the pair traded around 1.1220, retracing from its highest level since February 2022. This movement in the Euro-dollar pair provides insights into the US Dollar's corrective bounce and the ECB's concerns amid volatile trading conditions.

According to Bloomberg, ECB officials are facing challenges in predicting the central bank's future actions. The report emphasizes the difficulty of explaining the July rate hike, with policymakers expressing different perspectives.

Unnamed officials cited by Bloomberg News state that the task is to avoid signaling either another rate hike or a pause.

The final readings of June's Eurozone inflation statistics and US housing market indicators, along with other risk factors, are likely to capture the attention of Euro traders.

EUR/USD - Technical analysis

The EUR/USD pair experienced negative trading yesterday and made an attempt to break the 1.1200 level. However, it later rebounded and remained above this level after finding support near 1.1170.

This keeps our bullish view intact, with further upward movement expected towards our next target at 1.1418.

The EMA50 indicator continues to provide support for the suggested bullish trend. To strengthen the positive outlook, a breakout above 1.1245 is necessary.

It is important to note that a break below 1.1200, followed by 1.1170, could exert corrective bearish pressure on the price, with initial targets around the 1.1105 area.

For today's trading, the expected range is between the support level at 1.1170 and the resistance level at 1.1310.