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EUR/USD Rises Through 1.0200 As Fed Hikes Rate By 75 BpsThe EUR/USD pair advanced above the 1.0200 level after the Fed announced a 75 bps rate hike as widely expected. However, it seems that Jerome Powell’s cautious comments regarding future meetings disappointed some investors and weighed on the U.S. dollar. At the time of writing, the shared currency trades at the 1.0205 zone, recording a 0.9% daily gain, having hit a session high of 1.0212 after the announcement. The DXY took a big hit and fell below 106.35, losing 0.7% on the day. The Federal Reserve Chairman, Jerome Powell, admitted during the press conference that the economic activity is slowing down and that the housing sector has weakened due to higher mortgage rates. Nevertheless, Powell and Co. don’t consider that the U.S. economy is in a recession as some sectors are “doing too well”, like the labor market. In that sense, Fed Chair considered that a slowdown of the economy is necessary for the supply to catch up with the demand. He clarified that ongoing rate increases are appropriate for the following meetings but that the pace will be data-dependent and decided meeting by meeting. For the September meeting, Powell said that the FOMC wouldn’t hesitate to take an “unusual higher increase” if inflation doesn’t show compelling evidence that it is slowing down. The WIRP tool suggests that markets are pricing a 64.4% probability of a 50 bps hike and lower odds of 32.2% of a 75 bps increase at the Fed’s next meeting. From a technical perspective, the EUR/USD short-term outlook remains tilted to the downside, according to indicators in the daily chart, while the price continues to develop within a descending channel. The RSI holds a positive slope but is still below its midline, while the MACD printed a higher green bar, indicating a growing buying interest. To extend the recovery, the EUR/USD must secure the 20-day SMA, currently at 1.0193. In that case, the bulls may gather enough momentum to advance to the 1.0300 and 1.0350 levels. On the other hand, loss of the 1.0100 support area would expose the 1.0000 level and the cycle low of 0.9952.
by Alex_Boltyan_FXAnalyst
EUR/USD Falls Below 1.0150 As EU Recession Fears Grow Energy-led recession fears put an end to the EUR/USD recovery, with the shared currency tumbling to weekly lows. Meanwhile, the U.S .dollar trades firmly as investors brace for the FOMC decision. At the time of writing, the EUR/USD pair trades at the 1.0120 area, posting a 0.97% loss on the day, having hit an intra-day low of 1.0107 during the New York session. Russia announced that the Nord Stream 1 pipeline will operate at just 20% capacity from July 27. The threat of gas shortages increased drastically and so did the recession fears in Europe, especially in Germany and Italy, which are the most dependent on Russian gas. The yield of the 10-year German Bund has fallen more than 8% and stands at around 0.94%, indicating a higher demand for bonds as the economic outlook gets darker. Meanwhile, the greenback, measured by the DXY, jumped back above 107.00 and trades 0.7% higher as investors await tomorrow’s FOMC decision. Tightening expectation increased modestly as the WIRP suggests that the markets are pricing 75.1% odds of a 75 bps hike and a 24.9% probability of a 100 bps increase. From a technical standpoint, the EUR/USD short-term technical outlook remains bearish, according to the daily chart. A bearish 20-day SMA rejected the pair for the fifth time on Tuesday, signaling lack of bullish strength and favoring the bearish case. The RSI took a big hit and gained a significant negative slope, while de MACD printed a lower green bar that indicates a deceleration of the buying interest. The next support levels are seen at 1.0100 followed by parity and then the cycle low of July 14 at 0.9952. On the upside, resistance levels stand at the 20-day SMA, currently at 1.0205, followed by 1.0300 and 1.0350.
by Alex_Boltyan_FXAnalyst
EUR/USD Consolidates Above 1.0200 As Investors Brace For The FedThe EUR/USD pair shrugged off slowdown worries fueled by disappointing German IFO data and stayed afloat on Monday as the US dollar struggled to find demand in a risk-positive environment. At the time of writing, the shared currency trades at 1.0220, virtually unchanged since the weekly opening, after bouncing from a daily low of 1.0178 set during the European session. Germany published July’s IFO Business Climate survey, which fell to 88.6, missing the market consensus of 90.5. The Current Assessment survey also came in worse than expected and stood at 97.7, while the expectations index contracted to 80.3, exacerbating recession fears in the eurozone. Across the pond, the Federal Reserve Bank of Chicago published the Chicago Fed National Activity Index (CFNAI), which missed the market’s forecast and contracted to -0.19, fueling a dollar sell-off. Ahead of Wednesday's FOMC meeting, the 10-year US note yield hovers around 2.8%. Markets are pricing a 77.5% probability of a 75 bps hike and a 22.5% chance of a 100 bps increase when the Fed gives its verdict on Wednesday. According to the daily charts, the pair EUR/USD holds a short-term neutral bias as it struggles to consolidate above the 20-day SMA. The RSI trades with a positive slope below its midline, while the MACD prints higher green bars indicating a growing buying interest. If the EUR/USD holds above the 20-day SMA, currently at 1.0226, the bulls could gain enough momentum to target the following resistance levels at 1.0300 and 1.0350. On the downside, supports are seen at 1.0200, followed by the 1.0100 zone and then the parity level.
by Alex_Boltyan_FXAnalyst
1
U.S. Dollar Index Turns South Amid Weak Activity DataThe U.S. dollar, measured by the DXY index, struggles to find demand on Friday and is falling for second day in a row and posting the fifth decline in the last six trading days, following disappointing U.S. PMI data. Even though the DXY climbed to a daily high of 107.35 during the European session on the back of weaker-than-expected European PMIs, the dollar turned lower in the second half of the day. At the time of writing, the DXY trades at 106.45, 0.20% below its opening price and is on track to post a 1.4% weekly decline, snapping this way a three-week winning streak. S&P Global published Eurozone PMIs data, which showed the composite index fell below 50 for the first time in two years in July, printing at 49.4, missing markets expectations of 51. Meanwhile, across the pond, the U.S. composite PMI fell to a 26-month low of 47.5 and the downturn was led by a steep drop in the service sector's activity whose monthly reading was 47, missing by far the market's consensus of 52.6. The manufacturing PMI contracted to 52.3, but beat the investors' expectations of 52. Market attention now shifts to the FOMC meeting next week. Markets are pricing a high probability of a 75 basis points hike, while expectations of a 100 bps raise have decreased in relation to the start of the week. After the ECB took yesterday a “larger step” and surprised the markets with a 50 bps raise, the U.S. dollar could face further losses if the Fed rules off the 100 basis point increase despite the inflationary crisis. According to the weekly chart, the DXY holds a bullish perspective but will close this week with losses of around 1.4%, the steepest since January. The daily charts suggest a bearish outlook for the shorter term as the index failed to hold the 20-day SMA support. The daily RSI holds a negative slope in neutral area, while the MACD prints higher red bars, indicating increasing selling interest. The immediate support level is seen at 105.70, followed by the 104.70-65 area and then 104.00. On the upside, the 20-day SMA at 106.55 (former support) is the first resistance that the bulls must regain. Above, the next levels of resistance are seen at the 108.00 area, followed by the cycle high of 109.29
TVC:DXY
by Alex_Boltyan_FXAnalyst
EUR/USD Holds On To Gains After ECB-Inspired VolatilityThe EUR/USD pair manages to close Thursday with a modest 0.5% gain at the 1.0220 area following a spike to fresh two-week highs as the knee-jerk reaction to the European Central Bank higher-than-expected rate hike announcement. The ECB decided to raise rates by 50 basis points – a 25 bp move was expected and priced in by markets – and announced a Transmission Protection Instrument (TPI), a new anti-fragmentation tool, aimed at supporting the effective transmission of monetary policy across the euro area. The EUR/USD initially rallied to a high of 1.0278 but failed to sustain momentum and dropped back to the 1.0150 area with the ECB President Lagarde’s subsequent conference. At the presser, Lagarde confirmed that the following hikes will remain data-dependent and that the rate normalization path will be approached “step by step, month by month and meeting by meeting,” which seemed to put a stop to the pair’s rally. Investors now focus on the US Federal Reserve rate decision next Wednesday, as policy divergence may extend the EUR/USD losses. From a technical perspective, the EUR/USD holds a bearish short-term bias and this week's bullish momentum seems to be coming to an end as the bulls got rejected three times by the 20-day SMA. Repeated failure to take on this hurdle could add pressure on the pair in the upcoming days. If the EUR/USD breaks decisively the 20-day SMA, currently at 1.0260, it could gain bullish momentum and target next resistances at the 1.0300 and 1.0350 levels. On the other hand, the next support levels are seen at the 1.0200 psychological mark, followed by the 1.0100 zone and 1.0000 ahead of the cycle low of 0.9952.
by Alex_Boltyan_FXAnalyst
Gold Slumps To 11-Month Low On Dollar’s StrengthThe yellow metal slipped below the $1,700 threshold during the New York session on Wednesday as the greenback gathered pace across the board. The XAU/USD made fresh YTD lows at the $1,695 area as the market sentiment deteriorated. The U.S. Dollar Index advanced modestly and trades above 107.00 following three consecutive daily losses. At the same time, U.S. Treasury yields retreated – but the mild pullback but did little for gold price – while the U.S. 2s-10s curve remained inverted. Meanwhile, investors brace for the European Central Bank decision on Thursday. Bloomberg's World Interest Rate Probability (WIRP) tool suggests that a 25 bps hike is fully priced in for tomorrow’s meeting, but reports suggest that a 50 bps hike is not taken off the table. However, the hawks and doves division remains wide in the Governing Council as officials are struggling to reach a consensus on its new anti-crisis tool. Hence, it is more likely that Madame Lagarde will opt for the more cautious move. From a technical perspective, XAU/USD holds a short-term bearish outlook according to indicators on the daily chart, while the price continued to move lower after taking out the YTD lows. Still, the RSI stays in oversold territory, which could temper the yellow metal’s losses. On the downside, the next level is a major support area around the 2021 yearly lows of $1,676, followed by the $1,600 zone. On the other hand, immediate resistances are now seen at $1,700, followed by the weekly high of $1,723 and then the 20-day SMA at around $1,762 an ounce.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Accelerates Above 1.0200 With ECB In SightThe EUR/USD pair advanced further on Tuesday and reached its highest level in almost two weeks as investors brace for the ECB lift off, while the greenback faced selling pressure across the board. Speculations that the ECB might consider a 50 basis point rate hike when the Governing Council meets on Thursday propelled the EUR/USD to above 1.0200. The EUR/USD pair is currently trading at the 1.0220 area, recording a 0.8% daily gain, having reached its highest level since July 6 at 1.0269. The U.S. dollar was unfazed by low-key data. June Building Permits declined to 1.685M, but beat the market’s expectations of 1.65M. Housing Starts, on the other hand, fell 2% in the same month to 1.559M missing the market’s expectations of 1.585M. The US dollar index continues to soften and steps back to a 13-day low of 106.40 as capitals flow to riskier assets. The technical outlook for the EUR/USD remains bearish overall, although short-term indicators show dwindling downward momentum. On the daily chart, the RSI continues to gain a positive slope and advances towards its midline, while the MACD keeps printing smaller red bars, reflecting the decreasing selling interest. Critical short-term resistance is seen at the 20-day SMA, currently at 1.0294. A break above this level would pave the way to the 1.0350 and 1.0400 areas en route to the upper-bound of a descending channel, currently around 1.0540. On the other hand, support levels are seen at the 1.0120 area, followed by 1.0100 and the 1.0000 level.
by Alex_Boltyan_FXAnalyst
EUR/USD Pushes Higher As Investors' Mood ImprovesThe EUR/USD pair extends its recovery for a second straight day on Monday, moving away from parity and clinging to gains around 1.0150. Investors’ sentiment and risk impulses have dictated the trading pace as no relevant news was released. At the time of writing, the EUR/USD is trading at 1.0145, posting a 0.57% daily gain, having hit an 11-day peak of 1.0201. The US dollar struggles to find demand. The DXY index has extended its pullback from a 20-year high of 109.29 to below 107.00 before finding support. Additionally, the US 10-year yield hovers around 3% amid better market sentiment. On the other hand, the euro could extend its recovery ahead of Thursday’s ECB meeting as there will be no releases of important data from the US and the eurozone. However, Lagarde will have to give investors good reasons and convince them that a 25 bps hike will be enough to contain the EU inflation. On the contrary, the monetary policy divergence with the Fed will likely weigh on the euro following the decision. From a technical perspective, according to the daily chart, the EUR/USD holds a bearish bias, but indicators suggest that the pair could enter a consolidation phase in the following days. The RSI corrected from oversold readings and jumped to the 40.00 area, while the MACD prints lower red bars, indicating a deceleration of the selling interest. The next resistance levels are seen at the 1.0200 mark, followed by the 20-day SMA, currently at 1.0310, and then the 1.0400 area. On the other hand, support levels are seen at 1.0100, followed by the parity level and the cycle low of 0.9952.
by Alex_Boltyan_FXAnalyst
U.S. Dollar Index Loses Steam, Still Up For Third Week In A Row The U.S. dollar faces some profit taking into the weekend with the DXY pulling back from a two-decade high reached on Thursday at 109.29. At the time of writing, the index trades at the 108.05 level, 0.5% below its opening price, but still posting a 1.1% weekly gain, the third in a row. The Federal Reserve Governor Christopher Waller said on Thursday that markets may have gotten ahead of themselves by pricing a 100 bps rate hike in July. Also, he claimed that the FOMC will remain data-dependent. His not-so-hawkish tone hammered bets of a more aggressive move by the Fed and weighed on the greenback. On Friday, data showed U.S. June’s retail sales increased 1% after decreasing 0.1% in May, beating the market’s consensus of 0.8%, easing recession fears. The CME Group FedWatch Tool suggests that tightening expectations eased and that swaps markets are now pricing a 41.6% chance of a 100 bps hike for the FOMC’s July meeting. From a technical standpoint, the DXY holds a bullish bias according to the weekly and daily charts. Despite Friday’s pullback, the index is set to close a third consecutive weekly gain, but the shape of the candle suggests a deceleration of the bullish momentum. The daily RSI is correcting and holds a negative slope still in overbought territory, while the MACD continues to print lower green bars, indicating that the DXY downward correction may extend in the following days. On the downside, the next support levels are seen at 107.70 and 106.80. A break below the latter levels would pave the way to the 20-day SMA, currently at 105.93. On the upside, the next resistance levels are seen at Thursday’s high of 109.29. followed by 109.89 and the 110.00 psychological level.
TVC:DXY
by Alex_Boltyan_FXAnalyst
EUR/USD Bounces From Sub-Parity Levels But Retains Negative BiasThe EUR/USD pair fell to a fresh cycle low below parity as the US dollar soared across the board as risk-averse trading resumed following Wednesday’s US CPI volatility. After hitting a fresh 20-year low of 0.9952, the EUR/USD pair managed to recover some ground during the New York session and currently trades right above the 1.0000 level. The Dollar Index DXY reaching its highest level since December 2002 around 109.30. Fed’s tightening expectations were fueled by June’s US Producer Price Index (PPI), which rose to 11.3% YoY, surpassing market consensus of a 10.7% increase The core inflation eased to 8.2% in the annual reading from 8.5% in May, but also came in above the market forecast of 8.1%. Swaps markets are pricing an 85.7% probability of a 100 bps hike for the next FOMC meeting. Across the pond, the BCE faces the dilemma of rate hikes. For the next meeting, Christine Lagarde will try to convince the market participants that a 25 bps hike will be enough seeing the trade-offs between policy goals and economic growth in the eurozone. Monetary policy divergences with the US will likely continue to weigh on the euro as it enters in price discovery zone below the parity level. According to the daily chart, the short-term technical perspective for the EUR/USD remains clearly bearish as the shared currency makes lower lows and technical indicators remain in negative territory. The RSI shows a negative slope and it hasn’t yet corrected oversold readings, while the MACD shows a slight deceleration as it printed a lower red bar, all of which could lead to some consolidation over the last sessions of the week. The current low at 0.9952 is the last support level before uncharted territory. Buyers could arise around the 0.9900 psychological level. On the upside, a break above the 1.1000 level could ease the immediate selling pressure and pave the way to the 20-day SMA currently at 1.0350.
by Alex_Boltyan_FXAnalyst
EURUSD Bounces From Parity As Dollar Loses CPI-Inspired MomentumThe EUR/USD bounced from below parity once again on Wednesday and posts a modest daily gain in the 1.0050 area as the dollar failed to retain the data-triggered strength. The greenback rallied across the board after data showed the US Consumer Price Index rose by 9.1% in June, recording the highest inflation rate in forty years. Core inflation showed a slight deceleration as the YoY reading came at 5.9% from May’s 6% but above expectations of 5.7%. The knee-jerk reaction pushed the EUR/USD to a fresh 20-year low of 0.9997. However, the dollar made a U-turn – alongside US Treasury yields and Wall Street indexes – as, despite the hotter-than-expected inflation figures, investors remain hesitant on whether the Fed would dare to raise rates by 100 basis points. WIRP suggests tightening expectations increased as swaps markets are now pricing a 41.6% probability of a 100 bps hike for the next FOMC meeting. From a technical perspective, the EUR/USD retains a bearish short-term bias according to the daily chart, with the price making lower lows. However, reiterated rejection from the 1.0000 level and oversold conditions could lead to a corrective movement. On the upside, a recovery above the 1.0100-20 area could ease the immediate pressure, allowing a move towards 1.0200. A break above could pave the way to the 20-day SMA, currently at 1.0375. On the other hand, a decisive break below 1.0000 would expose the 0.9960 area. Loss of the latter would put the EUR/USD pair in uncharted territory.
by Alex_Boltyan_FXAnalyst
EUR/USD slides to parity as economic sentiment worsens in the EUThe EUR/USD pair extended its free-fall on Tuesday and hit the parity level for the first time since 2002 during the European session as Eurozone and Germany's ZEW surveys came in worse than expected. However, the shared currency managed to recover some ground and at the time of writing, the EUR/USD pair trades around 1.0060 with a modest 0.3% daily gain. ZEW published July’s economic sentiment survey of the Eurozone, which fell to -51.1 from June’s -28 and missed the market consensus of -32.8. The last time the economic sentiment was this low in Europe was at the depths of the euro crisis by the end of 2011. Additionally, Germany’s ZEW survey showed poor results and fell to -53.8, and its current situation survey fell to -45.8, indicating widespread economic pessimism across the Eurozone. Meanwhile, the yield on the U.S. 10-year note fell further to 2.899%, indicating a downbeat economic outlook amongst wary investors running for the hills. The U.S. dollar, measured by the DXY, posts a modest daily loss but holds near the 108.00 level after hitting a 20-year high of 108.56. Investors’ focus now turns to the U.S. Consumer Price Index for June, which will be published on Wednesday and is expected to show a new four-decade high of 8.8% for the inflation rate measured by the headline CPI. From a technical perspective, the EUR/USD holds a very clear short-term bearish bias according to the daily chart, with the price posting lower lows for sixth day in a row and indicators well into the red. The RSI hasn’t corrected oversold readings yet, although it is showing a positive slope, while the MACD continues to print higher red bars indicating strong selling pressure. The current bounce could extend over the next sessions, with 1.0100 and 1.0200 as next resistance levels. A break above the latter could pave the way or a steeper correction toward the 20-day SMA currently around 1.0395. On the other hand, support levels are seen at the parity level of 1.0000 followed by the 0.9960 area.
by Alex_Boltyan_FXAnalyst
Gold Hits Fresh 2022 Lows, Eyes U.S. Inflation Data Gold prices fall for the second day in a row on Tuesday, hitting the lowest level in almost ten months as the greenback continues to strengthen across the board. Spot gold, XAU/USD, dropped to $1,723 an ounce, its lowest level since September 2021, before recovering slightly. At the time of writing, the metal is trading around $1,730, 0.23% below its opening price. Mounting concerns about an economic slowdown in major world economies coupled with inflation pressures have raised red flags for investors that continue to fly to safety. The U.S. dollar continues to advance, even versus the precious metal, despite falling U.S. yields – reflecting higher demand for Treasuries. On Wednesday, the U.S. will publish June's inflation figures, measured by the annual Consumer Price Index, which is expected to reach a new four-decade high of 8.8%. Core CPI is forecast to post a 5.8% increase, slightly below the 6% May rate. Persistent inflation pressures have pushed the Fed to increase rates aggressively over the last months. Investors expect a 75 bps rate hike at the FOMC's next meeting, but Chair Powell has reiterated that higher increases – 100 bps – are not ruled out. From a technical standpoint, the XAU/USD holds a short-term negative bias, with the price posting lower lows below its main moving averages while indicators remain in negative territory in the daily chart. However, the RSI shows oversold conditions, which could suggest an upward correction or at least some consolidation before another leg lower. On the upside, immediate resistance is seen at $1,760, followed by the more relevant $1,800 psychological level, which is reinforced by the 20-day SMA. On the other hand, loss of the $1,720 major support area would expose the $1,700 level en route to August 2021 lows at the $1,675 zone.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Slumps Below 1.01 Amid Risk Aversion, Economic ConcernsFinancial markets started the week in risk-off mode. The EUR/USD pair broke below the 1.0100 level, the last major support area before the parity level, with the US dollar underpinned across the board amid global recession concerns. At the time of writing, the EUR/USD pair currency trades at de 1.0075 area, 1.08% below its opening price, having hit a fresh cycle low of 1.0052. Fresh lockdowns after a coronavirus outbreak in China fired up global supply chain disruptions fears, making the safe-haven flows dominate the markets on Monday. The US dollar, measured by the DXY index, stands at 108.10 after reaching its highest level since October 2002 at 108.19, while the yield on the US 10-year note slipped below 3.0%, signaling higher demand for bonds. In the absence of first-tier data releases, risk impulses will likely set the pace of the market for the rest of the day. The short-term technical perspective for the EUR/USD remains clearly bearish as the price continues to make lower lows and indicators remain in negative territory. The RSI has gained bearish slope and already stands at oversold levels, while the MACD prints higher red bars indicating a growing selling interest. The bears have gained momentum after taking out the 1.0100 support area, which could see the EUR/USD pair falling to the parity level for the first time in two decades. On the other hand, above 1.0100, the following resistance levels are seen at 1.0200 and 1.0300. A break above the latter could pave the way to the 20-day SMA currently at 1.0415.
by Alex_Boltyan_FXAnalyst
EUR/USD seesaws after NFP data, ends the week below 1.0200The pair EUR/USD seesawed between small gains and losses on Friday as investors assessed an upbeat June’s US nonfarm payrolls report. The shared currency is currently trading at the 1.0170 area, having hit a fresh cycle low of 1.0071 as a reaction to the NFP data and rising to a daily high of 1.0191 before losing momentum. The US Bureau of Labor Statistics data showed US economy created 372,000 new jobs in June, surpassing the market’s estimate of 268,000, which boosted the US dollar as knee-jerk reaction. Further data showed that wage inflation, measured by average hourly earnings, was 5.1% YoY, slightly above investors' estimates while the jobless rate remained unchanged at 3.6%. Meanwhile, ECB officials remain cautious about rate hikes at the upcoming meetings as they also assess the possibilities of the eurozone tipping into a recession. The divergence between the ECB and the Fed has put the EUR/USD in a downward spiral over the last months, all of which have been exacerbated with the Russian invasion of Ukraine. Both weekly and daily charts suggest a clear bearish perspective for the EUR/USD, which is on its way to parity as the pair remains below its main moving averages while indicators hover in negative territory. On the daily chart, the RSI stays in oversold levels, while the MACD keeps printing higher red bars as bearish momentum increases. The 1.0100 area, last seen in December 2002, is the last support that stands between the EUR/USD and parity. On the other hand, a break above the 1.0300 area could pave the way toward the former cycle low of 1.0349 and then to the 20-day SMA, currently at 1.0433.
by Alex_Boltyan_FXAnalyst
EUR/USD Falls Further Below 1.0200 Ahead of FOMC MinutesThe EUR/USD pair continues to hit fresh multi-decade lows on Wednesday as the greenback strengthened across the board following upbeat PMI services data for the U.S. economy. Global recession fears continue to haunt the market participants that seek refuge in safe-havens. At the time of writing, the pair is struggling around 1.0180, having struck a low of 1.0161. The U.S. services PMI measured by ISM came at 55.3 above the 54.5 expected by the market but showed a slowdown from May’s reading of 55.9. Across the pond, the Eurozone published mixed data with a modest advance in May in retail sales, but a decrease in Germany’s factory orders which fell 3.1% in the same month. The US dollar measured by the DXY index stands near the 107.00 level, having reached its highest level since December 2002, helped by the bounce seen in bond yields. Investors will keep an eye on the FOMC minutes from the June meeting, which will be released during the American session. According to the daily chart, the EUR/USD holds a clear bearish short-term perspective operating below its main moving averages and with technical indicators in negative territory. The RSI is already exhibiting oversold conditions, which could favor a breather for the euro before another leg south. On the downside, a break below the 1.0160 area would expose the 1.0100 psychological level en-route towards parity. On the other hand, the EUR/USD pair could go through some consolidation, with immediate resistance at the 1.0300 area, followed by the former cycle low at 1.0349.
by Alex_Boltyan_FXAnalyst
EUR/USD Plummets To Two-Decade Lows Amid Recession Fears The EUR/USD pair plummeted on Tuesday and hit its lowest level in 20 years, as the greenback soared across the board on a bout of risk aversion. Concerns remain the same. Stagflation fears are haunting investors that continue to seek shelter in the US dollar. The EUR/USD broke through May low of 1.0349 and the 1.0300 psychological level to hit its lowest level since 2002 at 1.0235. At the time of writing, the pair is trading around 1.0265, recording a 1.5% daily loss. Weighing on the euro, S&P Global published the final readings of the EU Services and Composite PMIs for June, which showed growth slowed to a 16-month low. Against the risk-off backdrop, Treasuries rallied and yields tumbled. The US 10-year bond yields dropped to 2.82%, while the 30-year yields fell to near 3%. US stock indexes fell sharply but trimmed losses by the closing bell, with the Nasdaq Composite and the S&P 500 making the cut into the green. From a technical perspective, the EUR/USD pair holds a clear short-term bearish bias according to the daily chart, with the price near multi-year lows and indicators in negative territory. The RSI gained a negative slope while the MACD prints higher red bars, indicating strong bearish momentum. The immediate support is seen at 1.0200. Loss of this level could send the shared currency to its lowest levels since the euro entered circulation and parity should not be ruled out. On the other hand, the next resistance is seen at the 1.0300 area, followed by the former cycle low of 1.0349 and the 1.0400 psychological level. Still, the bearish tone would prevail below a descending trendline drawn from 2022 highs, currently around 1.0600.
by Alex_Boltyan_FXAnalyst
1
EUR/USD Takes a Breather In Holiday-Thin TradingThe pair EUR/USD trades virtually unchanged in a quiet session on Monday as US stock and bond markets remain closed in observance of the Independence Day holiday. The pair currently hovers around the 1.0420 area, just a few pips below its Friday’s closing price. EU economic data came in worse than expected. The EU Producer Price Index rose by 36.3% YoY in May, below market expectations but still showing outstanding price pressures. In addition, the German Trade Balance in May printed a € 1 billion deficit, missing the market’s forecasts of a € 2.4 billion surplus, while the Sentix Investor Confidence printed a sharp decline in July. Investors’ attention remains on inflation pressures and recession prospects as central bankers walk the tightrope trying to tighten monetary policies in the correct dose, enough to cool down prices but not too much that leads to an economic slowdown. From a technical perspective, the EUR/USD holds a short-term bearish bias according to the daily chart, with the price trading below its main moving averages and indicators standing in negative territory. The RSI gained some slope but holds below its midline, while the MACD rests below its signal line but printed a lower red bar. The next support levels are seen at 1.049, May 13 cycle low, followed by the 1.0300 psychological level. On the other hand, to regain bullish momentum, the buyers will seek to recover the 1.0500 level, which could pave the way to advance toward the 20-day SMA currently at 1.0525 and then to the 1.0600 area, where the psychological level is being reinforced by a descending trendline drawn from the YTD high.
by Alex_Boltyan_FXAnalyst
EUR/USD Eyes 2022 Lows As Bearish Pressure MountsThe pair EUR/USD fell sharply on Friday and hit its lowest level in two weeks as the market’s mood worsened amid increasing global recession fear. The euro also took a hard hit after June’s core inflation data in the eurozone came in higher than expected. Following a recovery attempt during the European session, which reached an intra-day high of 1.0485, the EUR/USD pair turned south and struck its lowest level since June 15 at 1.0365. However, the pair managed to bounce from lows and closed the week at 1.0425, still posting a 0.54% daily loss and a 1.24% weekly decline. June’s Core CPI in the Eurozone came in hot, with the annual inflation reaching 8.6% from May’s 8.1% and higher than markets expectations of 8.5%. Despite inflation data, ECB tightening expectations softened, with markets pricing a 1.0% deposit rate by the year-end, down from 1.25% at the start of the week. Across the pond, US ISM manufacturing PMI for June came in lower than expected, with the monthly reading falling to 53, missing the market expectations of 54.9 and fueling growing recession fears. The 10-year bond yield slumped 4.2% on Friday and closed around 2.889% after hitting a one-month low of 2.791%, signaling higher demand for US Treasury notes as the American economy keeps showing signs of a deceleration. Fed Chairman Jerome Powell warned last Wednesday that there is no guarantee of a soft landing. From a technical perspective, the EUR/USD holds a bearish technical outlook according to the weekly chart, with the pair posting its fourth weekly loss out of the last five. The daily chart also shows a short-term negative bias as technical indicators remain in negative territory. The daily RSI shows a negative slope below its midline, while the MACD keeps printing higher red bars, indicating a growing selling interest. Immediate supports are seen at the cycle low of 1.0349, posted on May 13, and then the 1.0300 psychological level. On the other hand, the 1.0450 and 1.0500 levels are the next resistances to regain bullish momentum, which would pave the way to the 20-day SMA, currently at the 1.0530 area.
by Alex_Boltyan_FXAnalyst
US Dollar Index Takes U-Turn, Dips Back Below 105.00The US Dollar Index, which measures the value of the dollar versus a basket of currencies, turned lower and fell sharply during the New York session, pulling back from a two-week high of 105.55 to a low of 104.64. The DXY is trimming weekly gains after two daily advances in a row as the dollar weakened across the board following US data and amid month-end profit-taking. At the time of writing, the DXY is trading at 104.70, 0.4% below its opening price. The US Core Personal Consumption Expenditure Deflator increased by 0.3% in May, below market expectations of a 0.4% increase. The Core PCE Price Index increased by 4.7% YoY, also below the investor estimates showing a deceleration of the preferred Federal Reserve’s estimate of inflation. Data also showed data consumer spending rose just 0.2% in May, and real personal spending dropped 0.4%. Meanwhile, the US jobless claims came in at 231K in the week ending on June 24, missing market expectations of 228K, while the underlying trend in claims moved slightly higher, suggesting that the labor market is moderating to the Fed’s contractive policies. According to the daily chart, the DXY holds a bullish short-term perspective with its indicators holding into positive territory, although losing momentum after the recent decline. The RSI gained is heading south but well above its midline, and the MACD printed a lower green bar, indicating decreasing buying interest. On the upside, the next resistance levels can be seen at the 105.50 area, followed by the June 15 high of 105.78. Beyond this level, the DXY would be trading at its highest in nearly 20 years, targeting the 106.00 area. Alternatively, immediate support is seen at the 104.60 area, followed by the 104.00 zone where the 20-day SMA reinforces the psychological level.
TVC:DXY
by Alex_Boltyan_FXAnalyst
Gold Prices Seesaw In Volatile Session After GDP Powell CommentsGold prices seesaw between small gains and losses on Wednesday as investors assessed weaker-than-expected US GDP data and hawkish comments from Fed Chairman. The spot, XAU/USD, is currently trading at the $1,820 area, having hit a low of $1,812 earlier on the day and a high of $1,833 an ounce as the knee-jerk reaction to US GDP data. Data showed that the annualized US GDP contracted by 1.6% in the first quarter, missing the market expectations of a 1.5% contraction. The figures fueled recession fears in the US as the Fed carries out its contractive monetary policy and inflation remains at a four-decade high. Meanwhile, US yields – which could be considered the opportunity cost of holding gold – continued to pull back on Wednesday, making the yellow metal more attractive. The yield on the 10-year note slipped to 3.12%. At the same time, headlines from the ECB Forum on Central Banking are crossing the wires. At a policy panel shared with ECB and BoE leaders, Fed Chair Jerome Powell reiterated the FOMC’s commitment to bring down inflation. He added that while the Fed is not targeting the foreign exchange rate, dollar strength is disinflationary at the margins. From a technical standpoint and according to the daily chart, the spot price holds a short-term bearish perspective. The XAU/USD trades below its main major moving averages, while its indicators remain in negative territory. The RSI is gaining a positive slope but remains below its midline, while the MACD keeps printing red bars. Immediate support for the XAU/USD is seen at the $1,810 area, followed by the $1,800 psychological level and then the May low at $1,786. On the upside, the buyers must regain the $1835-45 area, where the 20- and 200-day SMAs converge. A break above the latter could pave the way to the $1,880 zone.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
EUR/USD Erases Weekly Gains as Dollar Strengthens The EUR/USD pair came under pressure on Tuesday and trimmed Friday and Monday’s gains as the greenback strengthened across the board with lingering recession fears weighing on the market’s mood. The euro got an early boost after European Central Bank President Christine Lagarde at the ECB Forum on Central Banking reiterated that the bank intends to raise rates by 25 bps in July but is ready to hike at a faster pace if needed. Meanwhile, disappointing US data did not prevent the dollar from advancing. The Conference Board’s Consumer Confidence Index dropped to 98.7 in June, the lowest level in 16 months. The Richmond Fed Manufacturing Index tumbled to -19 in June versus the market consensus of -11. Wall Street indexes posted sharp losses, the worst day for the US stock market in two weeks, with the Nasdaq Composite leading the way down again. US 10-year Treasury yields seesawed throughout the session and ended slightly lower at 3.175%. On Wednesday, the focus will be on the ECB Forum’s policy panel, which will feature Fed Chair Jerome Powell, BoE Governor Andrew Bailey, and ECB President Christine Lagarde. The short-term technical perspective for the EUR/USD pair has turned neutral according to the daily chart. The RSI is flat below its midline, while the MACD prints dwindling green bars, showing the loss of buying interest. The immediate support level is seen at the 1.0500 mark. A break below this level could mount bearish pressure and send the EUR/USD to the 1.0470 area, exposing the cycle low of 1.0348. On the other, immediate resistance is seen at the 20-day SMA at 1.0565, followed by a descending trendline drawn from February highs at around 1.0640. A break above this line could improve the short-term perspective.
by Alex_Boltyan_FXAnalyst
EUR/USD Pushes Higher As ECB Forum Gets Underway The EUR/USD pair pushed higher on Monday and closed with gains for the second session in a row as the greenback weakened across the board. The pair reached a daily high of 1.0614 but failed to consolidate above 1.0600 and pulled back during the New York session. At the time of writing, the EUR/USD is trading around 1.0580, up 0.25% on the day. The euro moved higher, underpinned by the rise in German yields, while the greenback exhibited weakness across the board despite the advance in US yields. Wall Street indexes had a positive start but then turned south and closed in the red. Market participants continue to assess the impact of monetary policy on employment and growth as major central banks have embarked on contracting cycles. Meanwhile, the European Central Bank Forum on Central Banking got underway in Portugal, with the main focus on Wednesday’s policy panel that will feature ECB, BoE and Fed leaders. From a technical perspective, the EUR/USD holds a slightly positive short-term bias according to the daily chart, although the inability to establish itself above 1.0600 is a sign of momentum lacking. If the euro manages to break above the psychological level, it would face key resistance at a descending trendline coming from February’s highs, currently around 1.0650. A rise past this trendline would improve the pair’s short-term outlook. On the other hand, the immediate support level is seen at daily lows in the 1.0550 area, followed by the 1.0500 mark and then the 1.0470 zone.
by Alex_Boltyan_FXAnalyst