EUR/USD Forecast: Risk of a steeper decline once below 1.0950

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0976

Upbeat United States macroeconomic data brought relief to financial markets.
Resurgent risk appetite was not enough to underpin the Euro.
EUR/USD at risk of falling further, but buyers did not give up.

The EUR/USD pair settled in the 1.0970 region on Thursday after losing the 1.1000 mark to upbeat United States (US) macroeconomic figures. The pair held within a tight range throughout the first half of the day but made a decisive bearish movement following the release of July Retail Sales, which unexpectedly increased by 1%, beating the 0.3% advance anticipated by market participants. Initial Jobless Claims for the week ended August 9 were up by 227K, better than the 235K expected.

The news brought relief and sent US indexes sharply up as investors decreased their bets on a potential recession in the country. Later in the day, the US released not-that-encouraging figures: Capacity Utilization hit 77.8% in July, while Industrial Production in the same month was down 0.6%, missing expectations. Nevertheless, stocks maintained positive momentum, while EUR/USD trimmed part of its early losses.

By the end of the day, investors kept believing the Federal Reserve (Fed) would deliver its first rate cut during the September meeting, although it is still unclear whether it would be 25 or 50 basis points (bps).

On Friday, the Eurozone will publish the June Trade Balance, while the US will release the preliminary estimate of the August Michigan Consumer Sentiment Index and the Michigan Consumer Inflation Expectations for the same month.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for the EUR/USD pair shows it could extend its slide. Technical indicators retreated from near overbought readings, maintaining their downward slopes within positive levels ahead of the Asian opening. At the same time, the pair develops above all its moving averages, with the 20 Simple Moving Average (SMA) heading north at around 1.0890. Finally, the 100 and 200 SMAs offer modest upward slopes far below the shorter one, limiting the odds for a sustained slide, particularly if the 1.0950 support level holds.

The pair is neutral-to-bullish according to technical readings in the 4-hour chart. Technical indicators lack directional strength within positive levels, while EUR/USD battles to recover above a bullish 20 SMA after piercing it earlier in the day. The longer moving averages grind north below the 1.0900 mark, suggesting buyers moved to the sidelines but not yet abandoned the pair.

Support levels: 1.0950 1.0900 1.0860

Resistance levels: 1.0970 1.1005 1.1045

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.

GBP/USD holds above 1.3350 with the 200-day SMA capping gains

The British Pound appreciates against the US Dollar on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average. This is a popular indicator, which lies a few pips below 1.3400 and has been capping Pound’s recovery over the last two weeks.

EUR/USD pops to weekly highs near 1.1460 on US CPI

EUR/USD regains traction and climbs further, revisiting the 1.1460 region on Tuesday. The pair’s marked uptick comes as the US Dollar continues to lose momentum across the board, particularly after US CPI data came below estimates in June.

Gold picks up pace, targets $4,100

Gold reverses the recent weakness and reclaims the area beyond the key $4,000 mark per troy ounce on Tuesday. The precious metal’s recovery picks up pace and approaches the $4,100 region in the wake of the release of lower-than-expected US inflation figures in June.

Crypto Today: Bitcoin, Ethereum, XRP extend sideways trading amid ETF outflows, US-Iran war escalation

Bitcoin hovers around $62,500 amid prevalent sideways trading. Meanwhile, major altcoins such as Ethereum and Ripple are holding above crucial support levels at $1,700 and $1.05, respectively, reflecting ongoing consolidation across the crypto sector.

Fed Chair Warsh to note they have no tolerance for persistently elevated inflation

According to the prepared remarks that Fed Chairman Kevin Warsh will deliver during his testimony on the Semiannual Monetary Policy Report before the US House Financial Services Committee, he will note that the Fed has no tolerance for persistently elevated inflation.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.