EUR/USD Analysis: consolidating at July’s lows ahead of ECB

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1212

Data this week likely be overshadowed by central banks’ decisions.
A scarce macroeconomic calendar and upcoming ECB announcement keeping investors sidelined.
EUR/USD at risk of retesting the yearly low at 1.1106 on a break below 1.1180.

The EUR/USD pair has spent most of this Monday confined to a tight range around 1.1210, unable to attract speculative interest and closing the day with modest losses. The American dollar grabbed some attention at the weekly opening, as risk aversion sent investors into safe-haven assets. The common currency, on the other hand, is out of buyers’ radar ahead of the ECB monetary policy decision later this week, as market players are anticipating more dovishness from European policymakers.

The macroeconomic calendar was quite scarce at the beginning of the week, as no data were coming from Europe, while the US just released the June Chicago Fed National Activity Index, which resulted in -0.02, much worse than the 0.10 expected, and slightly better than May’s -0.05. This Tuesday, the US will release the May Housing Price Index, Existing Home Sales for June and the Richmond Fed Manufacturing index for July. The EU will publish the preliminary estimate of July’s Consumer Confidence, seen unchanged at -7.2. Currencies this week will likely be about central banks rather than data.

EUR/USD short-term technical outlook

The EUR/USD pair has been consolidating at the lower end of July’s range, confined to a 20 pips’ range. The risk remains skewed to the downside, as the pair developed below the 23.6% retracement of its July’s decline at 1.1245. Technical readings in the 4 hours chart are aligned with the longer-term perspective, as the pair remains below all of its moving averages, and with the 100 SMA extending its decline below the 200 SMA, this last, converging with the 38.2% retracement of the same decline at around 1.1280. Technical indicators in the mentioned chart stand within negative levels, with moderate downward slopes, falling short of confirming another leg south. The pair bottomed at 1.1192 in July and at 1.1181 in June, with a break below this last probably opening doors for a test of the yearly low at 1.1106. The bearish case could be denied if the pair surges beyond the mentioned 1.1280 price zone.

Support levels: 1.1180 1.1150 1.1106

Resistance levels: 1.1245 1.1280 1.1315

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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