EUR/USD Forecast: Dollar’s rally pauses alongside risk-off
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Subscribe to PremiumEUR/USD Current Price: 1.0187
- ECB Meeting Accounts provided no new clues on monetary policy.
- US data failed to impress, reflecting the ongoing economic slowdown.
- EUR/USD consolidates below 1.0200, with the risk still skewed to the downside.
The EUR/USD pair consolidates losses just below the 1.0200 threshold as demand for the greenback paused alongside risk-off trading. Speculative interest felt some relief after the US Federal Reserve published the Minutes of the latest FOMC meeting, as policymakers repeated their well-known hawkish message but at least refrained from hinting at a 100 bps rate hike. US officials, however, left the door open for another 75 bps hike.
Another thing that was missing from the document was a reference to a potential recession, something that has been keeping investors on their toes lately. The fact that the Fed did not mentioned, however, does not mean the risk is not there. The Fed downwardly reviewed growth forecasts while remarking that inflation risks remain elevated.
Across the pond, the European Central Bank released the June meeting Accounts. The Governing Council agreed they need to preserve its credibility “by showing its resolve.” Some members still wanted to keep the door open for a larger rate hike in the July meeting, although President Christine Lagarde affirmed multiple times the hike would be 25 bps.
Other than that macroeconomic data released in the last few months point to an economic slowdown. Just today, Germany reported May Industrial Production, which advanced a modest 0.2% MoM, and declined by 1.5% YoY. The US published the May Goods and Services Trade Balance, which posted a deficit of $85.55 billion, and Initial Jobless Claims for the week ended July 1, up to 235K and worse than the 230K expected.
EUR/USD short-term technical outlook
Technically, the EUR/USD pair daily chart shows that bears are still in the driver’s seat. Technical indicators hold near oversold readings, having pared their declines but falling short of suggesting bearish exhaustion. At the same time, the 20 SMA keeps heading firmly lower, well above the current level, while the longer moving averages accelerated their slides above the shorter one.
In the near term, and according to the 4-hour chart, the risk is skewed to the downside. EUR/USD is developing below all of its moving averages, with the 20 SMA maintaining its firmly bearish slope above the current price and below the longer ones. The Momentum indicator resumes its decline within negative levels, while the RSI indicator consolidates at around 26, without directional strength.
Support levels: 1.0160 1.0120 1.0075
Resistance levels: 1.0220 1.0270 1.0330
EUR/USD Current Price: 1.0187
- ECB Meeting Accounts provided no new clues on monetary policy.
- US data failed to impress, reflecting the ongoing economic slowdown.
- EUR/USD consolidates below 1.0200, with the risk still skewed to the downside.
The EUR/USD pair consolidates losses just below the 1.0200 threshold as demand for the greenback paused alongside risk-off trading. Speculative interest felt some relief after the US Federal Reserve published the Minutes of the latest FOMC meeting, as policymakers repeated their well-known hawkish message but at least refrained from hinting at a 100 bps rate hike. US officials, however, left the door open for another 75 bps hike.
Another thing that was missing from the document was a reference to a potential recession, something that has been keeping investors on their toes lately. The fact that the Fed did not mentioned, however, does not mean the risk is not there. The Fed downwardly reviewed growth forecasts while remarking that inflation risks remain elevated.
Across the pond, the European Central Bank released the June meeting Accounts. The Governing Council agreed they need to preserve its credibility “by showing its resolve.” Some members still wanted to keep the door open for a larger rate hike in the July meeting, although President Christine Lagarde affirmed multiple times the hike would be 25 bps.
Other than that macroeconomic data released in the last few months point to an economic slowdown. Just today, Germany reported May Industrial Production, which advanced a modest 0.2% MoM, and declined by 1.5% YoY. The US published the May Goods and Services Trade Balance, which posted a deficit of $85.55 billion, and Initial Jobless Claims for the week ended July 1, up to 235K and worse than the 230K expected.
EUR/USD short-term technical outlook
Technically, the EUR/USD pair daily chart shows that bears are still in the driver’s seat. Technical indicators hold near oversold readings, having pared their declines but falling short of suggesting bearish exhaustion. At the same time, the 20 SMA keeps heading firmly lower, well above the current level, while the longer moving averages accelerated their slides above the shorter one.
In the near term, and according to the 4-hour chart, the risk is skewed to the downside. EUR/USD is developing below all of its moving averages, with the 20 SMA maintaining its firmly bearish slope above the current price and below the longer ones. The Momentum indicator resumes its decline within negative levels, while the RSI indicator consolidates at around 26, without directional strength.
Support levels: 1.0160 1.0120 1.0075
Resistance levels: 1.0220 1.0270 1.0330
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