EUR/USD Forecast: Outlook should shift to bearish below the 200-day SMA
Premium|Take advantage of 75% OFF on your first month.
Grab this special offer, it's a 1 year for FREE deal! And access ALL our articles and analysis.
You have reached your limit of 5 free articles for this month.
BLACK FRIDAY SALE! 75% OFF!
Grab this special offer, it's a 1 year for FREE deal! And access ALL our articles and analysis.
CLAIM OFFER- EUR/USD put the 1.0800 region to the test on Monday.
- The Dollar kicked off the week on a positive note.
- The next salient release will be Germany’s flash CPI.
EUR/USD succumbed to the firm start to the week by the Greenback, reversing two daily gains in a row and flirting with three-day lows near the 1.0800 region on Monday.
Conversely, the US Dollar (USD) managed to come roaring and advance to multi-day tops near 104.80, reclaiming at the same time the area beyond the critical 200-day SMA (104.33).
In addition, daily gains in the pair came pari passu with further weakness in US and German yields, at a time when investors expect both the Federal Reserve (Fed) and the European Central Bank (ECB) to cut their rates after the summer break.
In terms of monetary policy, the Fed is largely expected to maintain its rates at its July 31 meeting, while investors anticipate the central bank setting the stage for the start of the easing cycle in September.
An interest rate cut by the ECB in September has also been suggested by recent comments from Vice President Luis de Guindos.
The policy divergence between the Fed and the ECB should remain nearly unchanged, with both central banks forecast to cut rates in the next couple of months. However, the expectation of a soft landing in the US economy contrasts with some loss of momentum in the Eurozone's economic recovery, potentially leading to further weakness in European currency in the medium-term horizon.
Moving forward, market participants will closely follow the release of the preliminary Q2 GDP Growth Rate in both Germany and the euro bloc, as well as the advanced Inflation Rate in Germany, all due on July 30.
EUR/USD daily chart
EUR/USD short-term technical outlook
The weekly low of 1.0802 (July 29) is next on the downside for EUR/USD ahead of. The provisional 100-day SMA at 1.0796. Down from here comes the June low of 1.0666 (on June 26), ahead of the May low of 1.0649 (May 1).
On the other hand, early resistance is indicated at the July high of 1.0948 (July 17), followed by the March top of 1.0981 (March 8) and the important 1.1000 milestone.
Looking at the big picture, the negative bias should return to the pair if it stays below the crucial 200-day SMA (1.0820).
So far, the four-hour chart indicates some acceleration of the downward bias. Nonetheless, the 55-SMA at 1.0875 serves as early resistance, followed by 1.0948, 1.0981, and ultimately 1.1000. On the other hand, 1.0802 is first, followed by the 200-SMA at 1.0800 and then 1.0709. The relative strength index (RSI) bounced to around 38.
- EUR/USD put the 1.0800 region to the test on Monday.
- The Dollar kicked off the week on a positive note.
- The next salient release will be Germany’s flash CPI.
EUR/USD succumbed to the firm start to the week by the Greenback, reversing two daily gains in a row and flirting with three-day lows near the 1.0800 region on Monday.
Conversely, the US Dollar (USD) managed to come roaring and advance to multi-day tops near 104.80, reclaiming at the same time the area beyond the critical 200-day SMA (104.33).
In addition, daily gains in the pair came pari passu with further weakness in US and German yields, at a time when investors expect both the Federal Reserve (Fed) and the European Central Bank (ECB) to cut their rates after the summer break.
In terms of monetary policy, the Fed is largely expected to maintain its rates at its July 31 meeting, while investors anticipate the central bank setting the stage for the start of the easing cycle in September.
An interest rate cut by the ECB in September has also been suggested by recent comments from Vice President Luis de Guindos.
The policy divergence between the Fed and the ECB should remain nearly unchanged, with both central banks forecast to cut rates in the next couple of months. However, the expectation of a soft landing in the US economy contrasts with some loss of momentum in the Eurozone's economic recovery, potentially leading to further weakness in European currency in the medium-term horizon.
Moving forward, market participants will closely follow the release of the preliminary Q2 GDP Growth Rate in both Germany and the euro bloc, as well as the advanced Inflation Rate in Germany, all due on July 30.
EUR/USD daily chart
EUR/USD short-term technical outlook
The weekly low of 1.0802 (July 29) is next on the downside for EUR/USD ahead of. The provisional 100-day SMA at 1.0796. Down from here comes the June low of 1.0666 (on June 26), ahead of the May low of 1.0649 (May 1).
On the other hand, early resistance is indicated at the July high of 1.0948 (July 17), followed by the March top of 1.0981 (March 8) and the important 1.1000 milestone.
Looking at the big picture, the negative bias should return to the pair if it stays below the crucial 200-day SMA (1.0820).
So far, the four-hour chart indicates some acceleration of the downward bias. Nonetheless, the 55-SMA at 1.0875 serves as early resistance, followed by 1.0948, 1.0981, and ultimately 1.1000. On the other hand, 1.0802 is first, followed by the 200-SMA at 1.0800 and then 1.0709. The relative strength index (RSI) bounced to around 38.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.