EUR/USD Forecast: Bears aiming for June monthly low at 1.0667 and beyond
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UPGRADEEUR/USD Current price: 1.0687
- European Central Bank officials hit the wires, maintained the cautious stance.
- Stock markets trade mixed, a bounce in the tech sector limits panic selling.
- EUR/USD bearish case gains traction after the pair pierced the 1.0700 mark.
The US Dollar extends gains on Wednesday against most major rivals, pushing EUR/USD below the 1.0700 mark. Without relevant macroeconomic data in the way, market players keep an eye on stock markets and comments from central bank officials.
As for stocks, Asian shares advanced amid a bounce in the tech sector, led by NVIDIA, which halted a three-day slump. However, European indexes were unable to follow the lead and trade in the red. Wall Street futures trade mixed, with the DJIA still under pressure but the Nasdaq Composite and the S&P500 advancing amid gains in the aforementioned sector.
Regarding policymakers, Flavio Panetta, Governor of the Bank of Italy and member of the European Central Bank (ECB) Governing Council, said that officials are at a turning point in the monetary policy cycle. He added ECB officials should avoid “even casual” forward guidance on the timing of rate moves and cooled down concerns about stubbornly high service inflation, noting it is not abnormal. Finally, Panetta states that the economic environment is consistent with a normalisation of the monetary stance.
ECB Chief Economist Philip Lane was also on the wires and said that the overall transmission of monetary policy has been robust and, if anything, stronger than in previous cycles. Overall, ECB officials maintained a cautiously hawkish stance and failed to trigger relevant moves around the Euro.
Data-wise, Germany published the GfK Survey, which showed Consumer Confidence contracted to -21.8 in July from -21 previously, also missing expectations of -18.9. The American session will bring United States (US) May New Home Sales and the result of the latest Federal Reserve (Fed) System Bank Stress Test.
EUR/USD short-term technical outlook
The EUR/USD pair slowly but steadily approaches the June monthly low at 1.0667, the immediate support level. Technical readings in the daily chart support a downward extension, as the pair sild further below all its moving averages, with the 20 Simple Moving Average (SMA) accelerating lower below directionless 100 and 200 SMAs. At the same time, technical indicators turned firmly lower within negative levels, reflecting sellers' strength.
The 4-hour chart shows sellers are aligned around a mildly bearish 20 SMA, currently at 1.0709, while the 100 SMA gains downward strength far above the shorter one. Finally, the Momentum indicator aims marginally lower around its 100 level, not enough to confirm another leg south, while the Relative Strength Index (RSI) indicator also shows moderated bearish strength, although at around the 38 level, skewing the risk to the downside.
Support levels: 1.0665 1.0620 1.0580
Resistance levels: 1.0710 1.0750 1.0800
EUR/USD Current price: 1.0687
- European Central Bank officials hit the wires, maintained the cautious stance.
- Stock markets trade mixed, a bounce in the tech sector limits panic selling.
- EUR/USD bearish case gains traction after the pair pierced the 1.0700 mark.
The US Dollar extends gains on Wednesday against most major rivals, pushing EUR/USD below the 1.0700 mark. Without relevant macroeconomic data in the way, market players keep an eye on stock markets and comments from central bank officials.
As for stocks, Asian shares advanced amid a bounce in the tech sector, led by NVIDIA, which halted a three-day slump. However, European indexes were unable to follow the lead and trade in the red. Wall Street futures trade mixed, with the DJIA still under pressure but the Nasdaq Composite and the S&P500 advancing amid gains in the aforementioned sector.
Regarding policymakers, Flavio Panetta, Governor of the Bank of Italy and member of the European Central Bank (ECB) Governing Council, said that officials are at a turning point in the monetary policy cycle. He added ECB officials should avoid “even casual” forward guidance on the timing of rate moves and cooled down concerns about stubbornly high service inflation, noting it is not abnormal. Finally, Panetta states that the economic environment is consistent with a normalisation of the monetary stance.
ECB Chief Economist Philip Lane was also on the wires and said that the overall transmission of monetary policy has been robust and, if anything, stronger than in previous cycles. Overall, ECB officials maintained a cautiously hawkish stance and failed to trigger relevant moves around the Euro.
Data-wise, Germany published the GfK Survey, which showed Consumer Confidence contracted to -21.8 in July from -21 previously, also missing expectations of -18.9. The American session will bring United States (US) May New Home Sales and the result of the latest Federal Reserve (Fed) System Bank Stress Test.
EUR/USD short-term technical outlook
The EUR/USD pair slowly but steadily approaches the June monthly low at 1.0667, the immediate support level. Technical readings in the daily chart support a downward extension, as the pair sild further below all its moving averages, with the 20 Simple Moving Average (SMA) accelerating lower below directionless 100 and 200 SMAs. At the same time, technical indicators turned firmly lower within negative levels, reflecting sellers' strength.
The 4-hour chart shows sellers are aligned around a mildly bearish 20 SMA, currently at 1.0709, while the 100 SMA gains downward strength far above the shorter one. Finally, the Momentum indicator aims marginally lower around its 100 level, not enough to confirm another leg south, while the Relative Strength Index (RSI) indicator also shows moderated bearish strength, although at around the 38 level, skewing the risk to the downside.
Support levels: 1.0665 1.0620 1.0580
Resistance levels: 1.0710 1.0750 1.0800
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