EUR/USD Forecast: Euro could test 1.0100 with key resistances staying intact
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UPGRADE- EUR/USD has failed to reclaim 1.0200 following the latest recovery attempt.
- The shared currency could suffer additional losses in case 1.0150 is confirmed as resistance.
- FOMC will release the minutes of the July policy meeting later in the day.
After having dropped to its weakest level in nearly two weeks at 1.0122 on Tuesday, EUR/USD has managed to stage a rebound before losing its momentum at around 1.0200. The pair stays on the backfoot early Wednesday and the technical outlook suggests that additional losses are likely in the near term.
The risk-averse market environment helped the dollar continue to outperform its rivals during the first half of the day on Tuesday. The disappointing housing data, however, caused the currency to lose interest and opened the door for a rebound in EUR/USD.
Early Wednesday, the greenback stays resilient against its major rivals as markets remain cautious with US stock index futures losing between 0.2% and 0.4%.
In the second half of the day, the US Census Bureau will release the Retail Sales data for July, which is expected to show an increase of 0.1% on a monthly basis following the 1% expansion recorded in June. More importantly, the Federal Reserve will release the minutes of its July policy meeting at 1800 GMT.
The Fed's publication will not include policymakers' views on the latest developments surrounding inflation and the US labour market since the Nonfarm Payrolls and the Consumer Price Index data for July were released after the meeting. Hence, the minutes might not be able to influence the market pricing of the next Fed rate increase. Nevertheless, in case the statement shows that policymakers have discussed the possibility of a 100 basis points rate hike in July, that could be seen as a dollar-positive development and weigh on EUR/USD. On the other hand, a dovish tone would be with policymakers seeing a 50 bps hike in September as the most likely outcome. In that case, the pair could gather bullish momentum.
EUR/USD Technical Analysis
EUR/USD faces strong resistance in the 1.0200/1.020 area, where the 100-period and the 200-period SMAs on the four-hour chart are located. Unless buyers reclaim that level, the bearish bias should stay intact. Meanwhile, the Relative Strength Index (RSI) indicator stays below 50 and the 20-period SMA crossed below the 50-period and 100-period SMAs, supporting the view that sellers look to dominate the pair's action.
On the downside, 1.0150 (static level) aligns as first support. Although the pair dropped below that level on Tuesday, it managed to rise back above it. If this level is confirmed as resistance, additional losses toward 1.0100 (static level, psychological level) and 1.0050 (static level) could be witnessed.
Above 1.0200, resistance are located at 1.0230 (Fibonacci 38.2% retracement, 50-period SMA) and 1.0300 (Fibonacci 50% retracement).
- EUR/USD has failed to reclaim 1.0200 following the latest recovery attempt.
- The shared currency could suffer additional losses in case 1.0150 is confirmed as resistance.
- FOMC will release the minutes of the July policy meeting later in the day.
After having dropped to its weakest level in nearly two weeks at 1.0122 on Tuesday, EUR/USD has managed to stage a rebound before losing its momentum at around 1.0200. The pair stays on the backfoot early Wednesday and the technical outlook suggests that additional losses are likely in the near term.
The risk-averse market environment helped the dollar continue to outperform its rivals during the first half of the day on Tuesday. The disappointing housing data, however, caused the currency to lose interest and opened the door for a rebound in EUR/USD.
Early Wednesday, the greenback stays resilient against its major rivals as markets remain cautious with US stock index futures losing between 0.2% and 0.4%.
In the second half of the day, the US Census Bureau will release the Retail Sales data for July, which is expected to show an increase of 0.1% on a monthly basis following the 1% expansion recorded in June. More importantly, the Federal Reserve will release the minutes of its July policy meeting at 1800 GMT.
The Fed's publication will not include policymakers' views on the latest developments surrounding inflation and the US labour market since the Nonfarm Payrolls and the Consumer Price Index data for July were released after the meeting. Hence, the minutes might not be able to influence the market pricing of the next Fed rate increase. Nevertheless, in case the statement shows that policymakers have discussed the possibility of a 100 basis points rate hike in July, that could be seen as a dollar-positive development and weigh on EUR/USD. On the other hand, a dovish tone would be with policymakers seeing a 50 bps hike in September as the most likely outcome. In that case, the pair could gather bullish momentum.
EUR/USD Technical Analysis
EUR/USD faces strong resistance in the 1.0200/1.020 area, where the 100-period and the 200-period SMAs on the four-hour chart are located. Unless buyers reclaim that level, the bearish bias should stay intact. Meanwhile, the Relative Strength Index (RSI) indicator stays below 50 and the 20-period SMA crossed below the 50-period and 100-period SMAs, supporting the view that sellers look to dominate the pair's action.
On the downside, 1.0150 (static level) aligns as first support. Although the pair dropped below that level on Tuesday, it managed to rise back above it. If this level is confirmed as resistance, additional losses toward 1.0100 (static level, psychological level) and 1.0050 (static level) could be witnessed.
Above 1.0200, resistance are located at 1.0230 (Fibonacci 38.2% retracement, 50-period SMA) and 1.0300 (Fibonacci 50% retracement).
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