Euro Prospects: EURUSD deviates from the bullish course. Failure to hold beyond the psychological 1.1000 mark by the pair.
Euro-USD pair Key Points
As we approach the weekend, EURUSD struggles to hold over the crucial 1.1000 mark and retreats, testing the trend line assistance.
The Eurozone’s dismal economic statistics pushes investors to reduce their reliance to the single euro.
Euro Weekly Review
Early in the last week, the EURUSD recovered and temporarily reclaimed the key 1.1000 threshold, However, it was unable to maintain its gain. The pair ended the 5-day span weakly, at 1.0890. After a sharp drop on Friday in response to subpar European Purchasing Managers’ Index figures.
Even though the ECB raised its inflation forecasts and indicated more tightening for the near future horizon. The euro’s value remains on an upbeat bullish walk since the beginning of the month. However, the upward trend is starting to show a few true evidence of weakness as the US currency is starting to recover.
The change in mood may be related to the poor EU figures released on Friday. For reference, the factory output index dropped to 43.6 in June versus 44.8 in May. Marking its weakest reading in thirty-seven months and indicating a worsening industrial slump.
EU Economic Statistics
The services sector dropped sharply, dropping down 55.1 to 52.4, far lower than the consensus expectation of 54.5. According the latest HCOB Flash Eurozone PMI. Any number more than 50 can be interpreted as an increase in results. Whereas numbers lower than that suggest a decrease in output.
Even while it is not advisable to take any definitive action on just one report. The declining economic climate is concerning and might be a cause of instability for the dollar. A more stringent posture might lead to a worse downturn. Thus the ECB will struggle to explain future rises if regional demand dynamics do not settle or get better quickly.
In this environment, arriving economic data must be carefully examined. As they may provide insight into how monetary policies may develop in the future. The German Ifo business environment poll, the German GfK consumer confidence research. Plus, the Eurozone CPI statistics will all be major publications in the upcoming days and merit notice.
The EURUSD Technical Perspective
The EURUSD has begun to retrace its steps after hitting multi-week peaks on Thursday. Moving towards the weekend. The duo is testing its 50-day SMA with a rising trend-line at 1.0865. Although the short-term technical factors are still favorable. The market tilt may shift should the exchange rate breaks through the previously mentioned supportive technical region.
After reaching multi-week heights on Thursday, the euro-dollar pair has started to recover its advances. into the direction of the weekend. With an upward trend-line around 1.0865. the pair’s price is challenging its 50-day SMA. Despite this, the technical aspects remain positive in the brief term. Once the exchange rate crosses the earlier identified supporting technical zone, the market’s lean might alter.
At the opposite hand, should buyers come back and ignite a strong turn around. The psychological level 1.1000 would act as initial barrier. On a breakthrough over this resistance level, additional gains might be in keep. And the next objective being in the vicinity of 1.1100, next 1.1190 mark.
