Evening Update for EUR/USD – July 21, 2025
Based on original analysis by Economies.com
Overview:
The EUR/USD currency pair concluded Monday with a marginally negative performance, reflecting the broader market’s cautious sentiment amidst impending central bank decisions and mixed economic indicators. The pair’s most recent behavior on the chart suggests an ongoing consolidation phase near key support and resistance levels, hinting at a potential direction once price breaks out of its current range.
Technical indicators are giving off slightly bearish signals, reinforcing the likelihood of a downward continuation in the near term. However, market participants are weighing numerous geopolitical and economic events, which could add volatility and distort technical patterns.
This detailed update breaks down the various technical, fundamental, and sentiment-driven components behind the pair’s behavior as of July 21, 2025.
Technical Overview:
– EUR/USD traded in a relatively tight range throughout the day, closing slightly lower than its opening price
– Price action hovered below the 50- and 100-period Exponential Moving Averages (EMAs) on the 4-hour chart
– Bearish candlestick patterns formed near the resistance zone, adding pressure to the pair
– The next major support lies near the 1.0850 level, while resistance rests around the 1.0940 zone
Moving Average Analysis:
– 50 EMA: Sloping downward, indicating short-term bearish momentum
– 100 EMA: Also trending downward, reinforcing the broader bearish outlook
– 200 EMA: Relatively flat, suggesting the longer-term trend remains undecided
– Price is trading below all major EMAs on the 4-hour and daily timeframes
Relative Strength Index (RSI):
– RSI on the 4-hour chart is currently near 44, slightly below the neutral 50 zone
– This suggests that bearish momentum is building but has not yet reached oversold territory
– A dip below 40 could confirm increased selling pressure, signaling further downside potential
MACD (Moving Average Convergence Divergence):
– MACD line remains below the signal line, strengthening the bearish narrative
– The histogram remains in negative territory, although the bars are relatively small, which may suggest a consolidation phase before another directional move
– Traders watching for a more pronounced histogram expansion to confirm momentum
Price Patterns:
– Short-term consolidation observed, with price oscillating in a range between 1.0880 and 1.0940
– Formation of lower highs on the hourly chart points to gradual selling dominance
– A descending triangle pattern is developing, often indicative of a bearish continuation
Fundamental Factors Driving Price Movement:
Several macroeconomic elements are currently influencing the EUR/USD pair. These include monetary policy expectations, geopolitical tensions, and economic data releases from both the Eurozone and the United States.
Key Factors:
1. Central Bank Outlook
– European Central Bank (ECB): Investors are watching for signs of whether the ECB will hold rates steady or consider a cut in the coming months amid weakening inflation and tepid growth data. Dovish comments from ECB officials earlier in the week created bearish pressure on the euro.
– Federal Reserve (Fed): The Fed continues to maintain its hawkish stance. Recent speeches from Fed members reinforce the US central bank’s intent to remain vigilant on inflation, with a high likelihood that rate cuts may be delayed until Q4 2025 if current labor data remains robust.
2. Economic Reports
– Eurozone: Recent PMI figures have been disappointing, particularly in the manufacturing sector, which contracted further this month. Weak earnings in key sectors such as automotive and energy have also contributed to negatively affecting investor sentiment.
– United States: Retail sales and consumer confidence reports for July delivered mixed results. Although inflation shows signs of cooling, strong job market statistics continue to provide the dollar with resilient support.
3. Geopolitical Developments
– Reports regarding trade relations between the European Union and China have introduced new risks to the euro. The EU’s decision to consider tariffs
Read more on EUR/USD trading.