Today’s market saw a -0.27% decline in EUR/USD, trading around 1.07968, impacted by weaker-than-expected U.S. economic data and a general risk-off sentiment.
Key Points
- The Bank of England’s surprise rate cut has supported the euro amidst a global bond rally.
- Higher-than-expected U.S. unemployment claims are raising concerns about economic weakness, impacting market sentiment.
- The pair remains in a bearish trend, evidenced by a pattern of lower highs and lows.
EUR/USD Daily Price Analysis – 01/08/2024
Yesterday, the EUR/USD pair closed slightly higher at 1.08264, marking a modest gain of +0.11% from its open at 1.08148. This movement reflected a cautious market ahead of key economic data and central bank decisions. The pair’s stability was influenced by mixed economic signals, including the Federal Reserve’s decision to hold interest rates steady while hinting at potential cuts in September. Additionally, the Bank of England’s surprise rate cut added to the global bond rally, slightly boosting the euro.
Today, EUR/USD has opened lower at 1.08248 and has since decreased by -0.27%, currently trading around 1.07968. The decline can be attributed to a broader risk-off sentiment in the market, partly due to weaker-than-expected U.S. economic data. The latest unemployment claims came in at 249K, higher than the expected 236K, suggesting some labor market slack which may influence the Fed’s future policy decisions.
Key Economic Data and News to Be Released Today
The market’s focus will shift to the upcoming ISM Manufacturing PMI data, expected at 48.8, slightly higher than the previous 48.5. A weaker-than-expected reading could further weigh on the USD, potentially offering some relief to the euro. However, any significant divergence from expectations could lead to heightened volatility, as traders reassess the economic outlook and potential central bank actions.
EUR/USD Technical Analysis – 01/08/2024
The EUR/USD pair has been on a downtrend, as evidenced by the lower highs and lower lows. The recent price action shows a significant drop, followed by a minor pullback, indicating that the market might be consolidating or preparing for a potential further decline.
Given the current bearish trend and the position below the 200 EMA, the market is likely to continue its downward trajectory unless a significant reversal signal is observed. The RSI’s neutral position suggests there could be room for further downside before the market becomes oversold. The next support levels at 1.07931 and 1.07787 are critical to watch. If these levels hold, there might be a short-term bounce; however, if broken, further declines could be expected.
Conversely, if the price manages to break above the resistance levels, particularly the 200 EMA, it could indicate a shift towards a more bullish outlook. However, for now, the predominant bias remains bearish.
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