EURUSD 20-day EMA serves as an important hurdle for Euro bulls.
In Thursday’s European session, the EURUSD pair fell sharply after breaking below round-level support at 1.0800, reaching a new three-week low of 1.0777.
The US dollar recovers ahead of the US ISM Manufacturing PMI and NFP statistics for July.
The major currency pair falls following a robust recovery in the US dollar (USD).
The US Dollar Index (DXY), which analyzes the US dollar’s value against six major currencies, rises to 104.40 after recovering from a new weekly low of 103.86.
The US dollar climbed as market participants had already discounted the Federal Reserve’s (Fed) dovish interest rate forecast in Wednesday’s monetary policy decision. The Fed held borrowing rates constant at 5.25%-5.50%.
Fed Chair Jerome Powell stated that the second-quarter inflation data has given policymakers more confidence.
When asked about rate cuts in September, Powell said, “If we see inflation moving down more or less in line with expectations, growth remaining reasonably strong, and the labor market remaining consistent with current conditions, then I believe a rate cut could be on the table at the September meeting,” according to Reuters.
Going forward, investors focus on the United States (US) ISM Manufacturing PMI and Nonfarm Payrolls (NFP) data for July be published at 14:00 GMT and Friday, respectively.
Faster than expected Eurozone inflation rise has cast doubt on expectations of an ECB rate cut in September.
Meanwhile, faster-than-expected growth in preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for July casts doubt on whether the European Central Bank (ECB) will lower interest rates in September.
EURUSD Technical Outlook
On a daily basis, EURUSD trades within a symmetrical triangle formation with a sideways trend. The aforementioned chart pattern indicate a severe volatility contraction. Which is projected to last for some time due to the lack of unambiguous breakout or breakdown signs.
The same currency pair is under selling pressure at the 20-day Exponential Moving Average (EMA) at 1.0835, indicating that the near-term trend is bearish.
The 14-day Relative Strength Index (RSI) oscillates between 40.00 and 60.00 points, showing market participants’ indecision.
A A new downside might emerge if the asset falls below the round-level support of 1.0700, exposing the asset to the June 26 low at 1.0666, followed by the April 16 low around 1.0600.
On the other hand, an upward move above the June 3 high near 1.0900 will propel the asset toward the July 17 high at 1.0948 and psychological barrier at 1.1000.
