Daily Technical Analysis EUR/USD: EUR/USD Slips Back on Expectations of Key Data by OnEquity

[OnEquity]

The EUR/USD lost a third of a percentage point on Tuesday as investors huddle in anticipation of Wednesday's PMI figures from both Europe and the US.

Notably, PMI numbers will open the session in Europe today, with markets expecting a small uptick in Eurozone services PMI numbers to 53.0 in July, after posting 52.8 in June.

In the US, the July services PMI is estimated to decline slightly to 54.4 from 55.3 in June. Global markets believe in a Fed rate cut in September. Investors are closely monitoring all economic indicators in the US as they look for further signs of confirmation on the interest rate front. Traders are currently pricing in a near 100% chance that the Federal Open Market Committee (FOMC) will cut rates by around a quarter point at the September 18th rate call.

As the week moves on, the US quarterly Gross Domestic Product figures will be released on Thursday, and the Personal Consumption Expenditures (PCE) index on Friday. Q2 annual GDP is expected to rise to 1.9% from 1.4%. Friday's PCE core inflation is expected to fall to around 2.5% year-on-year for June, down from 2.6% last month.

The euro could rebound this week, with the focus on US politics, Eurozone PMIs, and the US Personal Consumption Expenditures (PCE) inflation index. However, some analysts warn that a possible fall in EUR/USD could mean that the price is caught in a classic 'bull trap,' signaling further weakness ahead. Key fundamental events to watch out for include Biden's withdrawal from the November election.

The 'Trump market,' generally seen as pro-dollar, could pull back following Biden's announcement on Sunday. His replacement for the nomination is likely to be Vice President Kamala Harris, who, according to polls, has a better chance of beating Trump. Overall, any positive flow of dollars related to Trump's presidency could be reversed if his chances of winning were reduced from now on.

Sentiment is currently dominating currency markets, with last week's global computer outage unsettling markets and inviting investors to buy dollars as a 'safe haven' at the expense of the euro. Once the problem is resolved, investor sentiment will improve, supporting the EUR/USD.

EUR/USD Daily Technical Analysis for July 24th:

According to the attached daily chart, bulls continue to look for further encouragement to push EUR/USD closer to the 1.1000 psychological resistance, which over time has been cited as pivotal for further upside momentum. Conversely, the 1.0820 and 1.0765 support levels represent a threat to the current upside momentum. We will also have to see how the bears behave as different data is released today.

 

[OnEquity]

Daily Technical Analysis EUR/USD: Rises Above 1.0850, With All Eyes on the Data
The EUR/USD is up slightly around the 1.0860 level in early Asian trading hours on Monday. The pair rose as market traders are widely anticipating the US Federal Reserve to cut interest rates in September, which caused the dollar (USD) to move sharply lower.

Inflation in the US, which is generally measured by the change in the personal consumption expenditures (PCE) price index, barely fell in June compared to a year ago, easing the way for an interest rate cut by the Federal Reserve in September. PCE inflation continued its slowdown in June, falling from 2.6 per cent y/y in May to 2.5 per cent in June. On a monthly basis, the PCE figure rose by about 0.1% in June, after being unchanged in May. The core PCE price index, the measure of inflation used for an annual view and preferred by the Fed, rose about 2.6 year-on-year in June, up from 2.5% in May, according to Commerce Department figures released on Friday.

However, the lower June inflation in the US is not fully potent for the Fed to start cutting interest rates at its expected August meeting on Wednesday this week. Similarly, analysts noted that there is significant progress on inflation and this will most likely allow the Fed to move closer to interest rate cuts and as such, they also said they still expect three rate cuts this year, starting at the September FOMC meeting. Financial markets have dismissed by about 90% the likelihood of a September cut, followed by another cut in November and December, according to the CME's FedWatch tool.

On the other hand, traders expect more rate cuts from the European Central Bank (ECB) in the near term. This, likewise, could weigh on the euro (EUR) versus the dollar (USD). The previous week, the ECB left interest rates unchanged, although weaker German IFO survey results and other softer data are paving the way for another rate cut by the bank. Traders will be looking closely at preliminary second quarter Gross Domestic Product (GDP) data for Germany along with the euro zone. If the data turns out better than expected, the common currency could gain ground against the dollar.

EUR/USD daily technical analysis for July 28nd:

According to the behavior on the attached daily chart, the trend remains strongly bearish towards the break of the important psychological support level of 1.0800, which if it happens, will give the bears more momentum to move sharply lower. Technically, the next important support levels will be 1.0745 and 1.0660, respectively. On the other hand, in the same time frame. As mentioned above, there will not be a strong and important change in the overall trend towards an uptrend without moving towards the psychological resistance of 1.1000 again.