EUR/USD Current price: 1.1218
- Risk sentiment amid tensions in the Middle East favors the greenback.
- US minor data disappointed, having a limited effect on the dollar.
- EUR/USD needs to break below 1.1180 to resume its decline.
The EUR/USD pair has started the week gapping lower, amid risk-averse sentiment fueling demand for safe-haven assets. The pair filled the gap but was unable to hold on to modest gains during Asian trading hours, now trading lower in range, above the 1.1200 figure.
The greenback appreciated on the back of turmoil in the Middle East, as adding to its current conflict with the US, Iran finished last week seizing two UK oil tankers. Adding fuel to the fire, the UK foreign minister, Sir Alan Duncan has resigned, not the best timing to do so. There were no relevant macroeconomic releases in the EU that could affect the pair, while the US just released the June Chicago Fed National Activity Index, which resulted in -0.02, much worse than the 0.10 expected.
Sentiment, related to the future decisions of the US Federal Reserve lead the way, as it’s unclear whether policymakers will cut by 25bps or more, with contradictory comments from officials making the dollar seesaw between sharp gains and losses.
EUR/USD short-term technical outlook
Meanwhile, the EUR/USD pair keeps trading at the lower end of its monthly range, not far from the multi-year low set this past May at 1.1106. The short-term picture indicates that the risk remains skewed to the downside, as, in the 4 hours chart the pair remains below all of its moving averages, while technical indicators stand within negative levels, although without directional strength. The pair is also developing below the 23.6% retracement of its latest daily slump, an immediate, relevant resistance around 1.1245. The pair bottomed at 1.1192 in July and at 1.1181 in June, making of this last a critical support area, as if it manages to break below it, the decline could continue toward the mentioned yearly low.
Support levels: 1.1180 1.1150 1.1110
Resistance levels: 1.1245 1.1280 1.1310
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