EUR/USD consolidates losses near 1.0730

EUR/USD trades neutral at the 1.0725 level, with mild gains.
US and German yields are sharply rising, contributing to the strength of both currencies.

Patricio Martín FXStreet

The EUR/USD consolidated Tuesday’s losses, which saw the pair losing more than 0.60%. The Shared Currency’s movements were driven mainly by a broad-based USD and EUR strength against their rivals on the back of higher US and German yields.

The US reported that the ISM Services PMI from the US from August increased to 54.5, higher than the 52.5 expected and the previous 52.7, and that outcome boosted hawkish bets on the Federal Reserve (Fed). After a mixed Nonfarm Payrolls report released last Friday, which made investors refrain from betting on one last hike, the CME FedWatch Tool now indicated that swaps markets are discounting higher odds of a 25 basis point (bps) increase in November.

The US also reported the Fed Beige Book, highlighting that the economy “modestly” grew in July and August and that the job growth was subdued.

On the Euro’s side, the European Central Bank’s (ECB) Governing Council will meet next week, and there are growing expectations that a 25 basis point (bps) hike will be announced. Analysts at Danske Bank pointed out that the persistently high inflation will be the main driver of the decision, which is expected to be the last hike of the cycle. In that sense, those expectations seem to keep the European currency afloat via rising German yields.

EUR/USD Levels to watch

The daily chart flashes signals of a bearish outlook for the short term for the EUR/USD. Regarding indicators, the Relative Strength Index (RSI) resides below its midline in negative territory, exhibiting a southward trajectory. At the same time, the Moving Average Convergence Divergence (MACD) prints red bars, underscoring the growing bearish momentum. Additionally, the presence of selling momentum is seen on the four-hour chart, with both indicators residing deep in negative territory.

On the bigger picture, the pair now resided the 20,100 and 200-day Simple Moving Averages (SMA) for the first time since November 2022, pointing out that the bears are in control.

Support levels: 1.0700, 1.0680, 1.0650.

Resistance levels: 1.0800, 1.0820 (200-day SMA), 1.0850.

EUR/USD Daily Chart

EUR/USD

Overview
Today last price	1.0725
Today Daily Change	0.0003
Today Daily Change %	0.03
Today daily open	1.0722

Trends
Daily SMA20	1.0865
Daily SMA50	1.0961
Daily SMA100	1.0918
Daily SMA200	1.082

Levels
Previous Daily High	1.0798
Previous Daily Low	1.0706
Previous Weekly High	1.0946
Previous Weekly Low	1.0772
Previous Monthly High	1.1065
Previous Monthly Low	1.0766
Daily Fibonacci 38.2%	1.0742
Daily Fibonacci 61.8%	1.0763
Daily Pivot Point S1	1.0686
Daily Pivot Point S2	1.065
Daily Pivot Point S3	1.0594
Daily Pivot Point R1	1.0778
Daily Pivot Point R2	1.0834
Daily Pivot Point R3	1.087

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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