EUR/USD Analysis: decline set to continue ahead of ECB’s announcement

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1170

EU Consumer Confidence is seen steady at -7.2 in July.
US housing data hardly enough to affect the dollar.
EUR/USD en route to test yearly low amid central banks’ imbalances.

The American dollar keeps marching higher against its major rivals, dragging the EUR/USD pair below the 1.1180 support, now trading at its lowest in almost two months. There was no specific catalyst behind the latest decline, but the market’s belief that the ECB will take a more aggressive approach to monetary policy than the US Federal Reserve.

News that a US negotiation team is heading to Beijing next week lifted the market’s sentiment, but also backed the greenback. As for macroeconomic data, the US will release shortly June Existing Home Sales, seen declining by 0.2% when compared to the previous month, and the Richmond Fed Manufacturing Index for July, expected at 5 vs. the previous 3. The EU will release the preliminary estimate of July’s Consumer Confidence, seen unchanged at -7.2

EUR/USD short-term technical outlook

The EUR/USD pair is technically bearish according to the 4 hours chart, as it is developing below all of its moving averages, which offer downward slopes. Technical indicators resumed their declines within negative levels after a failed attempt of recovering, with the RSI now at fresh monthly lows at around 39. The pair has now an immediate support in the 1.1150 price zone, and once below it, the path is clear toward 1.1106, the low for this year. The 1.1180/90 area offers resistance, yet the pair would need to recover beyond 1.1250 to lose the bearish potential, quite unlikely in the current scenario.

Support levels: 1.1150 1.1105 1.1070

Resistance levels: 1.1185 1.1220 1.1250

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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