Title: EUR/USD Analysis for July 14: Laying the Groundwork for Further Losses
Original article author: Mahmoud Abdallah
Source: MENAFN – EURUSD Analysis Today 14/07: Prepares For New Losses [link]
The EUR/USD currency pair has continued its downward trend, pressured by increasingly hawkish monetary policy from the US Federal Reserve and a weak economic outlook in the Eurozone. As of the writing of this analysis, the pair has dropped and remains under pressure from both technical and fundamental standpoints. This article provides a comprehensive breakdown of the factors driving EUR/USD movement, key technical signals, and expectations for the short to medium term.
Key Factors Influencing EUR/USD Movement
Several economic and geopolitical factors have influenced EUR/USD, causing the pair to slide further. The confluence of these elements hints at the possibility of further declines in the near term:
Hawkish Fed Signals
– Recent speeches by Federal Reserve officials suggest that the US central bank remains committed to its inflation-fighting strategy.
– Despite cooling inflation figures, Fed members indicate that more rate hikes could be necessary if inflation persists or resurfaces.
– This hawkish tone has strengthened the US dollar broadly, increasing its appeal as a safe-haven asset.
Strong US Economic Data
– Recent US consumer price index (CPI) data came in cooler than expected, but job market figures remain robust, with nonfarm payrolls demonstrating resilience.
– Positive retail sales and strong consumer demand have further cemented confidence in the country’s economic recovery.
– Stronger US data supports higher yields on government debt, drawing investment flows into dollar-denominated assets.
Weak Eurozone Fundamentals
– The Eurozone continues to face headwinds in the form of stagnant economic growth.
– Industrial production and manufacturing output in key economies like Germany and France have disappointed, raising concerns about the bloc’s economic health.
– The European Central Bank (ECB) remains cautious, and although they have implemented several rate hikes, the economic fragility in many Eurozone countries tempers future tightening measures.
Technical Analysis Overview
EUR/USD is trading near a critical technical level, and several signals in the price action and technical indicators suggest the bears may gain further control unless there is a reversal triggered by a major fundamental catalyst.
Current Price Action
– As of July 14, EUR/USD is trading near 1.0840, having lost significant ground from the multi-month highs it reached in early June around 1.1010.
– The pair broke through several support levels on its journey downward, indicating increasing bearish momentum.
Resistance Levels
Key resistance levels to watch include:
– 1.0900: Psychological resistance and prior support zone. If the pair rallies, this level may cap further upside.
– 1.0950–1.1000: Upper boundary of the recent consolidation range, marking previous attempts to regain bullish ground.
Support Levels
On the downside, traders are monitoring:
– 1.0820: First line of defense. If broken decisively, further declines could be accelerated.
– 1.0785–1.0800: Previously tested demand zone. Any break below here opens room toward year-to-date lows.
– 1.0730: A significant medium-term support that, if broken, could deepen the bearish trend.
Moving Averages Analysis
– The 50-day simple moving average (SMA) has started to turn downwards, indicating a potential shift in medium-term direction.
– The 200-day SMA remains flat but could become a resistance point if the pair attempts a recovery.
– The price of EUR/USD remains below both the 50-day and 200-day SMAs, which are typically interpreted as bearish signals.
Relative Strength Index (RSI)
– The RSI on the daily chart remains near 40, indicating that while the pair has been oversold, there is still room for additional losses before an oversold bounce becomes imminent.
Macroeconomic Calendar
Read more on EUR/USD trading.