EUR/USD Price Analysis – July 22, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its upward trend, trading robustly around 1.0891 and reaching an intra-day peak of 1.0903.
This rally was bolstered by a weakening US dollar, which lost momentum due to recent US political developments and heightened expectations of a Federal Reserve rate cut cycle potentially beginning in September.
Additionally, the European Central Bank's decision to keep interest rates unchanged and refrain from signaling any imminent rate cuts at its upcoming meeting further supported the euro, contributing to the gains in the EUR/USD pair.
Moving ahead, investors are keeping an eye on German Retail Sales and the US Chicago Fed National Activity Index, both due later today. Meanwhile, they are watching for signals about the Federal Reserve's future actions, which will impact dollar prices.
Political Shifts and Fed Rate Cut Expectations Weaken the US Dollar, Supporting EUR/USD
On the US front, the broad-based US dollar starts the new week on a bearish note due to recent political developments. US President Joe Biden’s surprising decision to step down from the 2024 Presidential election raises the probability of Donald Trump becoming the next president.
This political shift, combined with expectations that the Federal Reserve might cut interest rates in September, has made investors more willing to take risks.
As a result, the US dollar, usually seen as a safe-haven asset, loses strength and supports the EUR/USD pair. Additionally, rising bets on a Federal Reserve rate cut in September and the weak US labor market exert selling pressure on the dollar.
However, the CME FedWatch Tool shows less than a 5% probability of a move at the July meeting, but a nearly full rate cut is expected in September. New York Fed President John Williams indicated a rate cut could be warranted in the coming months, but not in July.
ECB’s Steady Rate Policy and Cautious Outlook Boost EUR/USD
On the other hand, the upticks in the EUR/USD pair are further bolstered by the ECB left interest rates unchanged last week and gave no hints about rate cuts at its next meeting.
ECB President Christine Lagarde indicated that although inflation in the Eurozone is getting better, high rates need to be maintained for now. The likelihood of a rate cut in September has decreased from 73% to 65%.
This cautious approach by the ECB is expected to support the euro against the US dollar. In short, the euro benefits from the ECB’s decision to hold rates steady and its careful, data-based strategy.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.08846, reflecting a modest gain of 0.09%. On the 4-hour chart, the pivot point is situated at $1.0876, which acts as a crucial marker for market sentiment.
Immediate resistance is identified at $1.0904, with subsequent resistance levels at $1.0924 and $1.0948. On the downside, immediate support lies at $1.0861, followed by stronger support at $1.0844 and $1.0825.
Technical indicators provide a nuanced picture. The Relative Strength Index (RSI) is currently at 44, suggesting that the currency pair is in neutral territory. This indicates that there is no immediate overbought or oversold condition, leaving room for further price movements in either direction.
The 50-day Exponential Moving Average (EMA) stands at $1.0888, slightly above the current price, hinting at a potential bearish trend if the price remains below this level.
Given the technical setup, a cautious approach is advised. A sell entry is recommended below the pivot point at $1.08953.
The suggested take profit level is $1.08603, aligning with the immediate support level. To mitigate risk, a stop loss should be placed at $1.0920, just above the next resistance level, to guard against unexpected upward movements.
Related News
GOLD Price Analysis – July 22, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.