© ActionForex.com, originally written by ActionForex.com Analysts. Rewritten and expanded for clarity and depth.
EUR/USD Faces Continued Downward Pressure Ahead of Significant Economic Reports
The EUR/USD currency pair remains under persistent bearish pressure, with recent price action indicating increasing vulnerability to further downside movement. As the market awaits the release of critical economic indicators, the Euro is struggling to recover against the US Dollar, reflecting both technical and fundamental pressures that continue to weigh on the pair.
Technical Overview and Key Price Levels
The EUR/USD remains in a downtrend, marked by a series of lower highs and lower lows on the hourly and daily charts. Current price action shows no signs of reversal, and the Euro has continued to slide against the Dollar, reflecting the market’s preference for the greenback amid global uncertainty.
Notable observations from a technical analysis perspective:
– The pair is trading well below the 55-day and 100-day Exponential Moving Averages (EMAs), reinforcing the bearish undertone in the short to medium term.
– The recent break below interim support zones, such as 1.0850 and 1.0800, has validated the strength of downward momentum.
– Momentum indicators like the Relative Strength Index (RSI) are currently trending lower but not yet in oversold territory, suggesting further downside potential.
– Price action has been conforming to a descending channel since mid-May and has shown no signs of a breakout.
Technical Highlights:
– Current Spot Rate: Approximately 1.0785 at the time of writing.
– Immediate Support: The 1.0752 swing low, followed by psychological and structural support near 1.0700.
– Resistance Levels: Initial resistance is expected at 1.0851. A sustained break above this zone would point to a potential recovery toward 1.0894 and then 1.0915.
Key Support and Resistance Levels:
Support:
– 1.0752: This level represents the recent swing low and forms a key short-term support. A decisive break below this level may confirm a continuation of the ongoing correction from the May high of 1.0894.
– 1.0700: A major psychological level and potential demand zone. A clean break below here would signify a deeper retracement in the broader uptrend initiated from April.
Resistance:
– 1.0851: Former support turned resistance. If the Euro manages to reclaim this zone, it may challenge 1.0894.
– 1.0894: The May swing high, serving as the nearest upside target in case of recovery.
– 1.0915: The maximum upward extension for now, above which bullish control could return.
A Look at Daily and Four-Hour Charts
The daily chart:
– Shows a clear deterioration in bullish momentum.
– The ongoing pullback from 1.0894 continues toward the lower bounds of the short-term trading range.
– A break below 1.0750 — which also coincides with short-term trend support — could lead to increased selling momentum.
The four-hour chart:
– Confirms that the tight consolidation above 1.0780 has been broken.
– There are early signs of a potential test of the 1.0700 horizontal support level.
What to Watch in the Days Ahead
Market participants are largely awaiting high-impact economic data which could provide the directional catalyst needed to determine the next leg for EUR/USD.
Key upcoming events and data include:
– Eurozone Inflation Data (CPI):
– Expectations are for a slight moderation in inflationary pressures.
– Core CPI, which strips out volatile food and energy prices, will be watched closely by the European Central Bank (ECB) to gauge longer-term inflation trends.
– A hotter-than-expected read could provide temporary support for the Euro by reducing prospects of aggressive rate cuts this year.
– US Non-Farm Payrolls (NFP) and ISM Services Report:
– These key indicators
Read more on EUR/USD trading.