EUR/USD Forecast: Long-term bullish perspective intact

EUR/USD Current Price: 1.1793

• US Congress “moving in the right direction” on an aid package, but still far apart on some issues.
• The market’s attention now shifts towards US ADP survey on private employment figures.
• EUR/USD weaker in intraday charts, but dips will probably be seen as buying opportunities.

The American dollar seesawed between gains and losses throughout the day, with major pairs confined to familiar levels. The EUR/USD pair peaked at 1.1805 during London trading hours but is ending the day with modest gains in the 1.1790 price zone. The US Congress seems unable to find common ground on the next aid package, a headline that affected the market’s mood. During the American afternoon, Senate Democratic leader Chuck Schumer says talks with the White House were finally moving in the right direction, boosting the market’s mood despite adding that they remain far apart on some issues, mentioning that the gap between the two parties is “about priorities and about scale.”

In the data front, the EU published the June Producer Price Index, which rose 0.7% in the month, and declined by 3.7% when compared to a year earlier, better than anticipated. The US, on the other hand, published the IBD/TIPP Economic Optimism Index, which improved to 36.8 in August from 44 in the previous month, and June Factory Orders, which roe 6.2%, beating the market’s estimate.

This Wednesday, Markit will publish the final versions of its July Services PMIs for most major economies, mostly expected to suffer upward revisions from preliminary estimates. The EU will also unveil June Retail Sales, seen up 5.5% in the month while the US will release the July ADP survey on private employment and the ISM Non-Manufacturing PMI, foreseen at 55 in July from 57.1 in June.

EUR/USD short-term technical outlook

The EUR/USD pair is trading uneventfully for a second consecutive day, yet holding above the 23.6% retracement of its July rally at 1.1735, with slides below the level quickly attracting buyers. The long-term perspective keeps favouring the upside, although, in the shorter-term, the bullish potential remains limited. The 4-hour chart shows that a flat 20 SMA kept capping gains, while technical indicators recovered from daily lows, but remain within negative levels. Lacking strength upwards. The dollar has a limited bullish potential, which means that the market will likely continue seeing dips as buying opportunities.

Support levels: 1.1735 1.1690 1.1650

Resistance levels:  1.1825 1.1860 1.1900

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