Daily Price Outlook
On Monday, the EUR/USD currency pair demonstrated a positive performance, rising by +0.19% within a 24-hour period and stabilizing at $1.1141. This marked the end of a 7-day losing streak, as the pair rebounded from losses incurred during the previous two sessions.
US Dollar Under lost its 5-Day winning Streak
During the early hours of Monday's trading session, signs of further recovery were evident, largely attributed to the declining prices of the US Dollar Index, which saw a decrease of -0.17% on a daily basis, settling at 100.90.
Additionally, the 10-year treasury yield declined by -0.31% to 3.82, further exerting pressure on the greenback throughout the day. The US Dollar Index (DXY) experienced a drop after a 5-day consecutive rise, having reached its highest levels since April 2022 during the previous week. The decline in the greenback's value on Monday can be partially attributed to anticipation ahead of Federal Reserve Chairman Powell's scheduled speech on Wednesday.
Market expectations suggest that the Federal Reserve will raise interest rates in the upcoming FOMC meeting, putting an end to rate cuts. This development has already been factored into the market, resulting in a correction in the price of the greenback.
ECB's Anticipated Cautious Rate Increase
Meanwhile, in the European context, the European Central Bank (ECB) is anticipated to enact a 25 basis-points rate increase, adopting a cautious approach in light of concerns raised by certain European policymakers about the potential risks associated with aggressive tightening. The German economy's severe slump has added to these considerations. President Lagarde is likely to adopt a "data-dependent approach," refraining from committing to another hike during the September meeting.
The possibility of a "dovish hike" could have a negative impact on the euro, leading traders to adjust their expectations for further monetary tightening. Moreover, the release of PMI data from both the USA and European nations today will play a significant role in influencing the prices of EUR/USD in the upcoming hours. Market participants will closely monitor this data for insights into the economic health of the regions and its potential impact on the currency pair's movement.
EUR/USD - Technical analysis
EUR/USD remained stagnant in recent sessions, trading within the 1.1105 support and 1.1170 resistance levels. The price must surpass either of these levels for clearer direction in its next targets.
As the price remains indecisive, a break below the support could lead to further declines targeting 1.1055 and 1.1000 levels. Conversely, breaching the resistance is crucial to resume the main bullish trend, aiming for 1.1275 and 1.1418 levels.
Expected trading range for today: 1.1050 (support) to 1.1210 (resistance).
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