EUR/USD Analysis: King Dollar takes the lead ahead of first-tier events
|EUR/USD Current Price: 1.1149
- EU Consumer Confidence rebounded a bit in July, still near record lows.
- Markit to report on services and manufacturing activity this Wednesday.
- EUR/USD bulls have no chances with the pair below 1.1180.
The EUR/USD pair is finishing Tuesday at its lowest in almost two months, paring intraday losses at around 1.1147. The American dollar appreciated steadily throughout the day, without a specific reason, but market players are pricing in the different approaches from policymakers to their respective monetary policies. US data disappointed, as the Housing Price Index increased by just 0.1% in May, well below the 0.3% anticipated, while Existing Home Sales decreased by 1.7% in June, missing the market’s forecast of -0.2%. Also, the Richmond Fed Manufacturing Index for July came in at -12 vs. an expected bounce to 5. In the EU, on the contrary, things were more positive, as Consumer Confidence rebounded in July according to preliminary estimates, printing -6.6 against the previous -7.2.
This Wednesday, Markit will publish the preliminary estimates of July PMI for the EU and the US. According to analysts’ forecasts, activity in the manufacturing sector in Germany and the EU is expected to have recovered just modestly but also to remain in contraction territory. The Services sector is seen in better shape. In the US, expectations are for both sectors, having expanded at a moderate pace. The US will also release June New Home Sales. Better-than-expected EU data can bring some relief to EUR buyers, although with the ECB unveiling its latest decision on monetary policy this Thursday, robust gains are unlikely.
EUR/USD short-term technical outlook
The EUR/USD pair is short-term oversold according to the 4 hours chart, amid the steady intraday slide and the fresh multi-week low. In the mentioned chart, the pair is developing well below all of its moving averages, with the 20 SMA accelerating south at around 1.1215, while technical indicators maintain their downward slopes, despite being in extreme levels. Some consolidation could be expected, but as long as the pair remains below the 1.1180 price zone, the risk remains skewed to the downside, with room for a retest of the yearly low at 1.1106.
Support levels: 1.1145 1.1106 1.1070
Resistance levels: 1.1180 1.1215 1.1245
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