The forex market continues to witness minimal volatility across the EUR/USD forum, leaving traders seeking catalysts to spark price movement. One event on the horizon that traders are keenly anticipating is Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium, scheduled for this Friday at 14:05 GMT.
While Powell’s speech undoubtedly stands as the pivotal event of the week, tomorrow holds its own significance. Euro Zone PMI numbers are set to be released, offering valuable insights into the overall health of the Eurozone’s economy. A reading above 50 indicates expansion, while a figure below 50 suggests contraction.
Recent data analysis highlights the ongoing struggles within the Euro Zone’s manufacturing sector. It comes off as a visible contrast in comparison to the gradual expansion of the service sector. The upcoming PMI numbers possess the potential to inject short-term volatility into the single currency’s value should the actual readings miss or surpass forecasts.
EUR/USD Technical Analysis: Awaiting Volatility’s Cue
EUR/USD has established a temporary base around the 1.0850 regions, although the pair currently faces a testing period. The US dollar’s resilience depends on the elevation of the US Treasury yields. The benchmark 10-year yield hovers near or just below a fresh 16-year high. The US Dollar Index (DXY) remains positioned above its 200-day simple moving average, with eyes potentially set on re-testing the May high at 104.658, particularly if Powell’s remarks on Friday lean towards a hawkish stance.
EUR/USD recently experienced a significant drop. Moreover, the pair marked its most substantial monthly decline in a month. In fact, it has retreated from the 100-day moving average (DMA). The cautious atmosphere preceding the preliminary PMI readings for August in the Eurozone, Germany, and the US, curbs the immediate downward trajectory for the major currency pair.
EUR/USD: Recent Price Movement and Key Support Levels
Technically, the confluence of the ascending trend line originating from November 2022 and a horizontal zone encompassing lows seen over the past two months (around 1.0835-50) provides a robust support zone for the EUR swap rates. This support region is further reinforced by the nearly oversold Relative Strength Index (RSI), hinting at a potential bottoming process.
Nevertheless, the 100-DMA at 1.0930 poses a potential barrier to the Euro’s corrective bounce. Especially in light of bearish signals from the Moving Average Convergence Divergence (MACD) indicator.
On the upside, the Euro faces challenges from a downward-sloping resistance line emerging since July 18, situated close to 1.0955 at the time of writing. Beyond that, previous highs from February and April at 1.1035 and 1.095, respectively, come into focus.
Conversely, a breach below 1.0835 would require validation from the 200-DMA support located around 1.0800 to substantiate the bearish case targeting May’s bottom near 1.0635.
EUR/USD Price Analysis: Technical Outlook and Recent Developments
EUR/USD investing saw a decline of 0.43% recently, touching a monthly low of 1.0832 and directing its focus towards the 200-day Moving Average (DMA). Meanwhile, the US Dollar Index (DXY) edged 0.26% higher to reach 103.591 as US Treasury bond yields strengthened the greenback.
While the Eurozone’s economic calendar maintains a relatively light schedule, EUR/USD remains steady. The release of S&P Global PMIs is awaited for potential directional cues.
Amidst Tuesday’s loss of traction and a new monthly low for EUR/USD, reaching 1.0832, a late influx of buyers in the Euro drove a recovery in the pair’s value. The currency pair is now trading at 1.0848 after marking a daily peak at 1.0930.
EUR/USD Outlook: Resistance and Support Levels
Despite this recent price recovery, the EUR/USD still demonstrates a neutral to downward bias, with a pattern of successively lower highs and lower lows. The immediate resistance lies at the August 3 daily low of 1.0912, crucial for buyers to sustain the uptrend momentum. If successful, the next resistance points are the 50-DMA at 1.0980, followed by the psychological 1.1000 level.
However, the current path of least resistance for EUR/USD is to the downside. Initial support rests at the August 22 low of 1.0832, followed by the 1.0800 level. The further downside would expose the 200-DMA at 1.0795 and the midpoint between 1.07 and 1.08.
As traders remain watchful of economic data and events, the forex market anticipates potential catalysts to ignite the EUR/USD forum movement.
