EUR/USD technical analysis: determined to break the parity
The EUR/USD exchange rate entered the new week’s trading once again, determined to break the parity rate. The currency pair actually broke down towards the support level of 0.9926, the lowest for the currency pair in two decades. It settled around the 0.9950 level ahead of the announcement of PMI readings for the manufacturing and services sectors for eurozone economies amid expectations of further slowdown in the bloc’s economy. due to the continuing Russian-Ukrainian war and its aftermath. .
The euro briefly benefited after ECB executive board member Isabelle Schnabel suggested last week that a second 0.50% ECB interest rate hike for September should not be ruled out. , but his relief from the selling pressure was temporary. The euro was quick to tumble towards parity in the second half of last week after remarks on Wednesday from a series of Fed officials reopened debate over whether the Fed could opt for a third increase of 0.75% in US interest rates. The next meeting is in September.
Commenting on the performance, Jordan Rochester, FX Analyst at Nomura said: “The Euro has been very range bound, but we don’t think that will last. There has been a huge imbalance in euro shorts since parity was reached, governments started sharing high energy costs with consumers, companies will have to start slowly cutting production, while lines supply are damaged by the lack of transport options and low water levels on the Rhine.
“The market could also start to push prices down in the US, with an eye on PMIs this week if we rebound as the Philadelphia Fed survey shows, this could also keep the euro under pressure” , added the analyst. The analyst’s view is a reconfirmation of expectations that EUR/USD will fall back to 0.9750 by the end of September.
Economic data EUR/USD
The euro recovered from the strength it lost earlier in July after some US economic data indicated the economy could be close to recession, while other data indicated inflationary pressures could s have been subdued in recent months, which has led to speculation about a possible slowdown in the economy. . This is the rate at which stagnation occurs. The Fed is expected to raise interest rates next year.
U.S. jobs numbers and other data scoffed at worries about the health of the economy earlier this month, while some members of the Federal Reserve’s rate-setting committee continued to tune little attention last week to the concept of a slowing pace of policy normalization. Looking ahead, leading to a simultaneous rally in US bond yields and the dollar.
- EURUSD will be sensitive this week to the message and implications of Tuesday’s latest S&P Global Manufacturing and Services PMI surveys, especially if they show signs of bottoming out expectations for European economies.
- Minutes of Thursday’s ECB meeting in July are also expected to be released, although the euro’s future largely hinges on the dollar’s response to economic data expected from the United States ahead of officials’ comments. from the Federal Reserve on Friday.
EUR/USD forecast today:
The general trend of the EUR/USD currency pair is still bearish. The stability below the parity price confirms that it is stronger. Continued control of the currency bears the trend and warns of a stronger bearish move if the factors of weakness in the currency pair persist. The euro could remain under pressure due to fears of a complete cut off of Russian gas from Europe. Therefore, any attempted bounce in the EUR/USD pair will be subject to selling.
The closest support levels for the Euro Dollar today are 0.9920, 0.9835 and 0.9770 respectively. However, on the daily chart, breaking the 1.0200 resistance will be important for a first break of the current downtrend. The euro will be affected by the announcement of the PMI readings for the manufacturing and services sectors for the eurozone economies. In the United States, the PMI reading for the manufacturing and service sectors and US new home sales will be announced.
Ready to trade our daily Forex analysis? We have compiled a list of the best Forex brokers worth trading with.