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EUR/USD Price Analysis: Seems vulnerable below mid-1.0500s amid bullish USD

  • EUR/USD consolidates in a narrow trading band through the Asian session on Thursday.
  • The fundamental backdrop and the technical setup support prospects for further losses.
  • A convincing breakout through the descending channel hurdle will negate the bearish bias.

The EUR/USD pair struggles to gain any meaningful traction on Thursday and oscillates in a narrow band below mid-1.0500s through the Asian session. The fundamental backdrop, meanwhile, seems tilted in favour of bearish traders and suggests that the path of least resistance for spot prices is to the downside.

Growing acceptance that the Federal Reserve (Fed) will hold rates higher for longer in the wake of a resilient US economy and to bring inflation back to its 2% target push the benchmark 10-year Treasury yield to a fresh 16-year peak. This, along with the risk of an escalation in war between Hamas and Israel, continues to underpin the US Dollar (USD). Apart from this, speculations that further rate hikes by the European Central Bank (ECB) may be off the table validate the negative outlook for the EUR/USD pair.

Even from a technical perspective, the recent failures near the top boundary of a downward-sloping channel extending from a 17-month peak touched in June point to a well-established short-term bearish trend. Moreover, oscillators on the daily chart, though have been recovering from lower levels, are still holding in the negative territory. This, in turn, supports prospects for an extension of this week's downfall from the vicinity of the 1.0600 mark and a further depreciating move for the EUR/USD pair.

Hence, a slide back towards retesting the weekly low, around the 1.0500 psychological mark, looks like a distinct possibility. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag the EUR/USD pair back to the YTD trough, around the 1.0450-1.0445 region touched earlier this month.

On the flip side, the 1.0600 mark, which now coincides with the descending trend-channel resistance, should continue to act as an immediate strong barrier. A convincing breakout should allow the EUR/USD pair to surpass the monthly peak, around the 1.0635 region and aim to reclaim the the1.0700 mark, representing the 50-day Simple Moving Average (SMA). The latter should act as a key pivotal point, which if cleared decisively will suggest that spot prices have formed a near-term bottom and pave the way for additional gains. 

EUR/USD daily chart

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Technical levels to watch

EUR/USD

Overview
Today last price1.0537
Today Daily Change0.0000
Today Daily Change %0.00
Today daily open1.0537
 
Trends
Daily SMA201.056
Daily SMA501.0705
Daily SMA1001.0829
Daily SMA2001.0822
 
Levels
Previous Daily High1.0594
Previous Daily Low1.0523
Previous Weekly High1.064
Previous Weekly Low1.0496
Previous Monthly High1.0882
Previous Monthly Low1.0488
Daily Fibonacci 38.2%1.055
Daily Fibonacci 61.8%1.0567
Daily Pivot Point S11.0509
Daily Pivot Point S21.048
Daily Pivot Point S31.0438
Daily Pivot Point R11.058
Daily Pivot Point R21.0622
Daily Pivot Point R31.065

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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