- The EUR/USD pair is consolidating below key SMAs (Simple Moving Averages).
- The US Dollar remains firm in the market, with the DXY posting its highest close in a month.
- The Euro also dropped against the Swiss Franc and Pound.
The EUR/USD dropped below key moving averages and tested levels under 1.0900. The recovery from the lows could alleviate the bearish pressure, but the overall trend remains downward. The US Dollar remains resilient across the board.
On Tuesday, the US Dollar Index finished above 103.00, marking its highest daily close in over a month. This was driven by higher US Treasury yields. The Greenback remains strong despite expectations that the Federal Reserve (Fed) will keep interest rates unchanged. US yields continue to rise, with the 10-year approaching 4.20% and the 2-year nearing 5%. On the economic front, Retail Sales data from the US are due on Tuesday.
The Euro underperformed on Monday and experienced losses against the Swiss Franc and the Pound. Data released on Monday showed that the Wholesale Price Index in Germany dropped 0.2% in July, contrary to expectations of a 1.4% decline. However, the annual rate stood at -2.8% against an expected -2.6%. The ZEW Survey will be released on Tuesday.
EUR/USD short-term technical outlook
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The EUR/USD dropped to 1.0874, reaching its lowest level in a month, and then rebounded above 1.0900. However, the Euro failed to recover a key area at 1.0925, represented by the 55-day and 100-day Simple Moving Averages (SMAs). The daily close below those lines suggests further weakness ahead. Technical indicators on the daily chart do not strongly indicate more losses, hinting at potential consolidation. However, the overall trend remains bearish.
On the 4-hour chart, the EUR/USD found support at 1.0875 and has rebounded without surpassing key levels. The Relative Strength Index (RSI) is pointing south, approaching 30, while Momentum remains below midlines. The Euro needs to rise above 1.0970 to change the short-term outlook from negative to neutral. A consolidation below 1.0880 would open the doors to July lows at 1.0830.
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