EUR/USD Forecast: Bearish pressure mounts

The US Dollar consolidates gains after the release of the FOMC minutes ahead of key US labor market data.
Eurozone wholesale inflation drops more than expected in June.
The EUR/USD is near relevant support; bulls need a break above 1.0910.

Matías Salord FXStreet

The EUR/USD lost ground for the second day in a row, falling below the 20-day simple moving average. A cautious tone across equity markets, higher US yields, and a stronger dollar after the FOMC minutes weighed on the pair which fell toward 1.0850.

Data from the Eurozone showed positive developments regarding inflation. The European Central Bank (ECB) Consumer Expectation showed that three-year median inflation expectations remain unchanged at 2.5%. The Producer Price Index declined to a negative annual rate of 1.5%, below the expected -1.3%. On the negative front, the final Eurozone June Services and Composite PMI were revised lower to 52.0 and 49.9, respectively. The Composite dropped below 50 for the first time since December, increasing fears of a recession. The economic figures weighed on the Euro. On Thursday, Germany will report Factory Orders, and Eurozone Retail Sales are due.

The US dollar rose across the board on Wednesday amid cautious markets and despite a softer-than-expected Factory Orders report. The Greenback consolidated gains after the FOMC minutes, which showed some members favored a rate hike at the June meeting. US yields moved further north after the minutes, with the 10-year yield reaching 4.95%, the highest level since mid-March. The focus now turns to US labor market data. On Thursday, the ADP private employment report, Jobless Claims, and JOLTS will be released, and on Friday, Nonfarm Payrolls.

EUR/USD short-term technical outlook

The outlook is turning negative for the Euro after the EUR/USD pair dropped below the 20-day SMA. Technical indicators in the daily chart point to the downside, with the Relative Strength Index (RSI) moving south and the Momentum breaking under 100.00. Together with the price below the 20-day SMA, this offers a bearish signal. The negative tone will ease if the Euro manages to post a daily close above 1.0915.

Ahead of the Asian session, the EUR/USD is testing the 1.0850 area. A break lower would increase the negative pressure, exposing last week's low at 1.0835; below, a decline to 1.0800 seems likely. On the upside, immediate resistance is located at 1.0890. However, the Euro needs to break a downtrend line currently at 1.0912 in order to negate the current bearish tone. Indicators on the 4-hour chart also favor the downside, with RSI below the midpoint but still not showing oversold conditions.

View Live Chart for the EUR/USD

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

AUD/USD trims some losses, bounces back to 0.7150

AUD/USD has traded on the back foot on Monday, coming close to the 0.7100 mark before rebounding toward the 0.7150 region ahead of the opening bell in Asia. The Greenback’s solid performance has kept the risk complex under pressure, sending the Aussie to fresh monthly lows on the back of rising bets for a Fed rate hike this week. on Tuesday, investors are now expected to closely follow key data releases in China.

USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.

Gold retests $4,300; USD losses momentum

Gold picks up fresh upside traction and challenges the key $4,300 mark per troy ounce on Monday. The yellow metal, however, remain on the back foot on the back of marked gains in the US Dollar and rising US Treasury yields across the curve.

JasmyCoin: Upbit delisting raises risk of further losses

JasmyCoin shows signs of stability at the time of writing on Monday. However, the token remains constrained between support at $0.0035 and resistance at $0.0040. Since May, its technical structure has continued to deteriorate, with the price falling from highs of $0.0078. JASMY’s outlook suggests that bears have the upper hand as bulls fight to defend key support levels.

Will the Fed deliver the hawkishness markets are pricing in?

Fed hike bets increase after PPI and CPI reports. Updated dot plot to be crucial for the dollar’s reaction. Warsh’s independence faces test amid Trump’s pressure for lower rates. For the Dollar to extend gains, Fed needs to satisfy current hawkish bets.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.