- EUR/USD turns south after rejection at 1.0200 as risk-off flows dominate.
- US dollar finds demand, despite weaker yields and cautious Fed minutes.
- The euro looks vulnerable amid the deepening EU energy crisis and growth risks.
EUR/USD is heading towards 1.0150, on the defensive amid a risk-averse environment in Thursday’s trading so far.
The US dollar Is finding renewed safe-haven bids, courtesy of brewing geopolitical tensions between the US and China after the former announced formal trade negotiations with Taiwan early this autumn. Additionally, investors assess the Fed July meeting minutes, which revealed that the world’s most powerful central bank is now facing a dilemma in taming inflation while averting recession.
On Wednesday, the dollar reversed gains, in an immediate reaction to a cautious shift in the Fed’s tone on policy guidance. The minutes hinted at a likely slow down in the pace of tightening amid mounting risks to economic growth. The US Treasury yields extended their previous advance amid recession fears while Wall Street indices tumbled.
Meanwhile, the euro bore the brunt of the downward revision to the Eurozone Q2 GDP print, which came in at 0.6% vs. 0.7% booked in the first estimate. Additionally, the deepening energy crisis in the old continent, thanks to the Russia-Ukraine war and excessive heatwave that has dried up the Rhine river in Germany.
The cargoes carrying coal, food supplies, etc. have been cut down ever since the water level in the Rhine fell below the critical 40 cm level. Markets are expecting the water level to rise above that level during the weekend, which could bring some relief to the shared currency.
Looking ahead, the Eurozone final inflation, US weekly Jobless claims and the speeches by the Fed and ECB policymakers will be closely followed for fresh trading impetus in the main currency pair.
EUR/USD: Technical outlook
“In the 4-hour chart, the risk remains skewed to the downside. The pair is developing below all of its moving averages, with the 20 SMA heading firmly south and crossing below the longer ones. Technical indicators, in the meantime, recovered from their intraday lows but remain below their midlines. Support levels: 1.0150 1.0105 1.0070. Resistance levels: 1.0205 1.0240 1.0280,” FXStreet’s Chief Analyst Valeria Bednarik explains.
EUR/USD: Additional technical levels to watch
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD traders seem non-committed around 0.6500 amid mixed cues
AUD/USD extends its consolidative price move just above 0.6500 on Friday. The RBA's hawkish and upbeat market mood supports the Aussie, though mixed Australian PMI prints fail to inspire bulls. Moreover, bets for a slower Fed rate-cut path continue to fuel the post-US election USD rally and cap the currency pair.
USD/JPY slides to 154.00 as higher Japanese CPI fuels BoJ rate-hike bets
USD/JPY languishes near 154.00 following the release of a slightly higher-than-expected Japan CPI print, which keeps the door open for more rate hikes by the BoJ. That said, the risk-on mood, along with elevated US bond yields, could act as a headwind for the lower-yielding JPY and limit losses for the pair amid a bullish USD, bolstered by expectations for a less dovish Fed and concerns that Trump's policies could reignite inflation.
Gold price advances to near two-week top on geopolitical risks
Gold price touched nearly a two-week high during the Asian session as the worsening Russia-Ukraine conflict benefited traditional safe-haven assets. The weekly uptrend seems unaffected by bets for less aggressive Fed policy easing, sustained USD buying and the prevalent risk-on environment
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.