So far on Friday, the Euro (EUR) and US Dollar (USD) seem to have encountered. Some initial resistance around the 1.1240 area.
In reality, the EURUSD presently appears to have taken a break. Amid a flimsy attempt by the Greenback to rebound. After hitting fresh highs in the 1.1240/45 area earlier in the Asian trading hours.
The US dollar is still under a lot of pressure despite the so-far lackluster comeback. As investors continue to speculate about the possibility. That the Federal Reserve may be approaching the conclusion of its tightening campaign. Recent evidence of cooling US consumer prices. And the ongoing downward trend in producer prices have strengthened this opinion.
Governor Christopher Waller of the FOMC spoke in the interim. After he hinted that the Fed could require two more rate rises this year. Powell late on Thursday aligned himself with the Committee’s pervasive hawkish narrative.
Lower-than-expected US inflation data for the month of June, which confirm that disinflationary forces are still in full force in the US economy and, secondly, support expectations that the Federal Reserve might end its ongoing hike campaign sooner rather than later, have rekindled the strong upward impulse in the pair.
In a situation where the anticipated future actions of the European Central Bank (ECB). And the Federal Reserve (Fed) are taking into consideration. Market players have already priced in a quarter-point rate increase by both at their meetings later in the month. Discussions regarding the Fed and the ECB normalizing their monetary policies are still going on. Particularly in light of growing worries about an economic downturn on both sides of the Atlantic.
The only release in the old continent at the end of the week was the domestic calendar, which showed a €0.3B deficit in the euro area for May. The preliminary readings of the Michigan Consumer Sentiment for the current month are anticipated to receive all of the attention in the US docket.
The Euro fluctuates between gains and losses close to its top in 2023.
On Friday, the EURUSD remains close to 1.1250.
Fed’s Waller supported the Fed raising interest rates twice more this year.
The USD Index plunges to fresh lows approaching 99.60 15-month lows.
Rate increases of 25 bps are anticipated from the Fed and ECB this month.
The morning in Europe sees slight declines in Oil and Gold.
Technical Outlook
The current price movement in EURUSD raises the possibility that more gains might be on the horizon in the near future. However, the overbought situation of the present pair (as shown by the daily RSI being far over 70) leaves room for a potential short-term corrective move.
On July 14, the duo recorded a new 2023 high of 1.1243. Once this barrier has been broken, the next significant resistance level is the 1.1495 peak from 2022, which was recorded on February 10th.
On the negative side, the 1.1000 area shows signs of psychological Prior to the July low of 1.0833 (July 6), support was provided by temporary contention at the 55-day and 100-day SMAs at 1.0881 and 1.0852, respectively.
The next area of dispute should be reached by the collapse of this sector not earlier than May’s low of 1.0635 (May 31), which also appears to be supported by the important 200-day SMA (1.0651). The 2023 low of 1.0481 (January 6) follows the March low of 1.0516 (March 15), which is to the south of here.
Furthermore, as long as the pair maintains a price above the significant 200-day SMA, the EURUSD outlook is still positive.
