EUR/USD Forecast: Pressure mounts ahead of FOMC Meeting Minutes
|EUR/USD Current Price: 1.0905
- The Euro Zone confirmed the economy grew a modest 0.3% in the three months to June.
- Market participants await the July FOMC Meeting Minutes for clues.
- EUR/USD keeps battling to retain the 1.0900 mark, sellers think otherwise.
The EUR/USD pair remains depressed, trading just above the 1.0900 threshold in another dull session dominated by risk aversion. Market players keep an eye on Chinese woes and their potential effects on the global economy while assessing inflation figures and their impact on monetary policies.
Asian shares edged sharply lower, reflecting concerns surrounding the Asian giant, although European indexes returned from the holiday with a bit more optimism, trading mixed around their opening levels. Wall Street’s futures replicate such behavior seesawing between modest gains and losses.
Meanwhile, government bonds recover ground, pushing yields lower. The 10-year United States (US) Treasury note currently offers 4.21%, while the 2-year note yields 4.93% after briefly surging past 5% on Tuesday. Still, the US Dollar retains its overall strength across the FX board.
Earlier today, the Euro Zone released the second estimate of the Q2 Gross Domestic Product (GDP), confirming it at 0.3% QoQ. Additionally, Industrial Production rose by 0.5% MoM in June, beating expectations. Across the pond, the US published July Building Permits and Housing Starts, up 3.9% and 0.1%, respectively.
The US will later unveil July Industrial Production and Capacity Utilization, while the Federal Open Market Committee (FOMC) will publish the July meeting Minutes. Speculative interest awaits confirmation the Federal Reserve (Fed) will pause the tightening cycle in September and would likely welcome an optimistic outlook. The focus will be on how policymakers see the labor market and whether there are signs it is cooling down.
EUR/USD short-term technical outlook
From a technical point of view, EUR/USD could soon approach the 1.0800 price zone. The daily chart shows sellers continue to reject advances around the 100 Simple Moving Average (SMA), while the 20 SMA heads firmly lower above the longer one. At the same time, the Momentum indicator picked up amid the pair’s early advance but remains below its 100 level, falling short of confirming another leg north. Finally, the Relative Strength Index (RSI) indicator extends its consolidative phase within negative levels, currently at around 41 and skewing the risk to the downside.
The 4-hour chart shows that EUR/USD cannot advance beyond a bearish 20 SMA, which accelerates its slide below the longer ones. Meanwhile, technical indicators gyrate south after failing to cross their midlines into positive territory, supporting a downward extension, particularly on a break below 1.0870, the immediate support level.
Support levels: 1.0870 1.0825 1.0790
Resistance levels: 1.0960 1.1005 1.1055
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