Share:
  • EUR/USD has stabilized below 1.0200 following Tuesday's drop.
  • Investors are reassessing the Fed's rate outlook ahead of key ISM Services PMI data.
  • Bears could show interest if the pair falls below 1.0150 support.

EUR/USD has gone into a consolidation phase below 1.0200 after having lost more than 100 pips on Tuesday. The pair could find it difficult to gather recovery momentum in the near term amid a cautious market mood.

The risk-averse market environment amid heightened geopolitical tensions allowed the dollar to gather strength against its rivals on Tuesday. Additionally, relatively hawkish comments from Fed officials help the currency hold its ground. 

Chicago Fed President Charles Evans said a 50 basis points (bps) rate hike would be a reasonable assessment for the September policy meeting but added a 75 bps increase would also be okay. Meanwhile, Cleveland Fed President Loretta Mester noted that she has not seen inflation cool ‘at all’ and reiterated that they are committed to bringing inflation under control. Following these comments, the probability of a 75 bps rate hike in September climbed above 40% from 20% earlier in the week, according to the CME Group's FedWatch Tool.

Later in the day, the ISM will release the Services PMI report for July. On Monday, the ISM's Manufacturing PMI survey showed a significant decline in the Prices Paid component. In case the data shows that inflation pressures in the service sector eased in a similar way, the dollar could weaken against its peers and open the door for a EUR/USD rebound.

Markets are expecting the Prices Paid component of the service sector to rise to 81.6 in July from 80.1 in June. A reading in line with market consensus, or even higher, should allow the US Dollar Index to regain its traction and weigh on EUR/USD.

EUR/USD Technical Analysis

EUR/USD faces immediate resistance at 1.0200 (psychological level, 50-period SMA on the four-hour chart). As long as this level stays intact, buyers could opt to remain on the sidelines. In case the pair reclaims that level and starts using it as support, additional gains toward 1.0230 (Fibonacci 38.2% retracement level of the latest downtrend), 1.0275 (200-period SMA) and 1.0300 (Fibonacci 50% retracement) could be witnessed.

On the downside, 1.0150 (Fibonacci 23.6% retracement) aligns as first support ahead of 1.0100 (psychological level, static level). A four-hour close below the latter could be seen as a significant bearish development and trigger another leg lower toward parity.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD keeps range near 1.0650 ahead of German IFO survey

EUR/USD keeps range near 1.0650 ahead of German IFO survey

EUR/USD is keeping its range play intact near 1.0650 in the early European hours on Monday. Markets stay risk-averse, weighing the Fed's 'higher-for-longer' rate view and lingering China's property market woes. Germany's IFO survey eyed. 

EUR/USD News

GBP/USD remains on the defensive below the 1.2250

GBP/USD remains on the defensive below the 1.2250

GBP/USD remains on the defensive below the mid-1.2200s early Monday. The US Dollar is clinging to the previous week's gains alongside firmer US Treasury bond yields while the Pound Sterling weighs the Fed-BoE policy divergence amid a quiet calendar. 

GBP/USD News

Gold remains stuck below key averages, what’s next?

Gold remains stuck below key averages, what’s next?

Gold price is easing toward $1,920, making it for a negative start to a key week ahead. The United States Dollar (USD) and the US Treasury bond yields have entered a phase of consolidation near last week’s high, as investors look to this week’s inflation data from the US and Europe for a fresh directional impetus.

Gold News

Ethereum whales prepare ahead of futures Ethereum ETF approval on October 2

Ethereum whales prepare ahead of futures Ethereum ETF approval on October 2

Ethereum price is likely going to witness a massive spike in volatility soon due to the circumstances surrounding the approval of the token’s futures Exchange-Traded Fund (ETF). According to Twitter users, the ETF is likely going to be approved on October 2.

Read more

Is inflation falling further?

Is inflation falling further?

A first flash estimate of Eurozone inflation in September is expected. In August, inflation fell slightly to 5.2%. While the downward pressure from energy prices has eased slightly, the momentum of food prices has continued to decline.

Read more

Majors

Cryptocurrencies

Signatures