Daily technical and trading outlook – EUR/USD
Trend daily chart
Rising fm o/s
21 HR EMA
55 HR EMA
Trend hourly chart
Near term down.
Rising fm o/s
13 HR RSI
14 HR DMI
Consolidation with downside bias.
1.0257 – Mon’s high.
1.0204 -Mon’s NY low (now res).
1.0180 – Mon’s low (now res).
1.0108 – Tue’s low.
1.0082 – Last week’s low (Mon).
1.0050 – Last Thur’s European high (now sup).
EUR/USD – 1.0137.. Although euro briefly rebounded to session highs of 1.0250 in Asia, price quickly retreated n then tumbled in Europe on renewed Nord Stream concerns, euro later fell to as low as 1.0108 in NY b4 recovering.
On the bigger picture, despite euro’s LT upmove fm 2017 near 14-year low of 1.0341 to a fresh 3-year peak of 1.2555 in mid-Feb 2018, decline to a near 3-year 1.0637 low (Mar 2020) signals correction has ended. Although euro staged a rally to a near 33-month 1.2349 peak in early Jan 2021, subsequent selloff to 1.1705 (Mar) signals top is made. Euro’s break of 1.1705 n then firm breach below 2020 bottom at 1.0637 in Apr to a 5-year bottom of 1.0350 in mid-May n then break of 2017 trough of 1.0341 to a 20-year low of 0.9953 in mid-Jul suggests price would head twd 0.9860 later next month, reckon 0.9640 should hold. Only a daily close abv 1.0360 confirms temporary low is made, risks 1.0462, abv, 1.0542.
Today, euro’s break of 1.0131 sup to 1.0108 confirms 1st leg of correction fm Jul’s 0.9953 bottom has ended last Thur at 1.0278 n falling hourly indicators would pressure price to 1.0077 (61.8% r), oversold readings would keep euro abv 1.0048/50 n bring rebound. Abv 1.0204 may head back to 1.0250/57.
EURUSD Forecast: Euro looks vulnerable ahead of Fed rate decision
(Eren Sengezer – FXStreet)
– EUR/USD has gone into a consolidation phase above 1.0100.
– Near-term technical picture points to a bearish tilt following Tuesday’s drop.
– The Fed is widely expected to raise its policy rate by 75 bps.
EUR/USD has steadied above 1.0100 after having lost more than 100 pips on Tuesday. The near-term technical outlook shows that sellers look to retain control but the trading action is likely to remain subdued ahead of the US Federal Reserve’s policy announcements.
The Fed is expected to raise its policy rate by 75 basis points (bps) despite the fact that the market positioning following the higher-than-expected inflation data showed that investors were leaning toward a 100 bps hike. The modest decline witnessed in the long-run inflation expectations of the University of Michigan’s Consumer Sentiment Survey and the disappointing PMI surveys caused markets to refrain from betting on a 100 bps hike.
At this point, a 75 bps hike shouldn’t be a surprise. Market participants look for fresh clues regarding the September rate decision. According to the CME Group’s FedWatch Tool, there is a 50% chance that the US central bank will raise its policy rate by a total of 125 bps in the next two meetings. Hence, the dollar could gather strength in case FOMC Chairman Jerome Powell leaves the door open for a 75 bps hike in September.
On the other hand, growing fears of recession and the worsening conditions in the housing market could force the Fed to adopt a cautious tone. In that case, the greenback could face renewed selling pressure and help EUR/USD stage a rebound. With the energy crisis in Europe deepening and the European Central Bank (ECB) remaining behind the tightening curve despite July’s 50 bps hike, however, it would not be easy for the pair to go into a long-lasting recovery.
EURUSD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart dropped below 50, pointing to a bearish tilt in the short-term outlook. Additionally, EUR/USD now stays below the 100-period SMA on the same chart, confirming the view that buyers stay on the sidelines.
On the downside, 1.0100 (psychological level) aligns as key support. In case this level fails on a hawkish Fed tone, additional losses toward 1.0000 and 0.9950 (July 14 low) could be witnessed.
Strong resistance seems to have formed at 1.0150, where the Fibonacci 23.6% retracement level of the latest downtrend and the 100-period SMA is located. If that level turns into support, buyers could target 1.0200 (psychological level, 50-period SMA) and 1.0230 (Fibonacci 38.2% retracement).
EURUSD: Dollar on hold ahead of Fed’s meeting
(Vasilis Tsaprounis – TopFX)
The US currency is on hold after yesterday’s gains of over 150 basis points awaiting the Federal Reserve’s decision to raise interest rates later today.
An increase of 75 basis points is fully expected and is cited as the base scenario by the majority of Investment banks.
Some bets that had started to appear and reported a possible increase of 100 basis points have been minimized after the latest data on the course of the US economy.
Consumer confidence shows signs of weakening while already yesterday retail giant Walmart reported falling sales and profits. While the International Monetary Fund revises down the forecasts for the development path of the American and European economies, noting as the biggest risk the energy landscape as it has evolved due to the war in Ukraine.
The pair is currently trading above the 1,01 level but maintaining a mild downward momentum.
We do not expect any major surprise from today’s meeting of the US Federal Reserve Bank . But very likely as in the past such days favor the increasing speculation and volatility is expected to be increased.
The general market view remains the same and according to our base scenario the possibility of new pressures on the euro is increased before the long-term climb to higher levels .