EUR/USD Current price: 1.1428
- Trade war retakes centre stage as the August 1 deadline looms.
- German inflation unexpectedly ticked higher in June.
- EUR/USD aims to resume its slide and pierce the 1.1400 mark.
The EUR/USD pair bottomed at 1.1401 on Wednesday, as the US Dollar (USD) surged on the back of solid United States (US) data and a mostly hawkish Federal Reserve (Fed) monetary policy decision.
The US economy grew at a faster-than-anticipated pace in the second quarter of the year, according to the preliminary estimate of the Q2 Gross Domestic Product (GDP), which rose by 3% after declining by 0.5% in the first quarter of the year. Even further, the ADP Employment Change report showed that the private sector added 104K new job positions in July, beating the 78K expected and improving from the -23K posted in June.
The Fed kept interest rates on hold, as widely anticipated, and showed no rush to trim interest rates, despite constant pressure from US President Donald Trump. Generally speaking, the central bank delivered a hawkish message, further boosting demand for the USD.
Meanwhile, the looming August 1 deadline on tariffs undermines the mood. The White House announced tariffs on Brazil and imports of semi-finished copper products and copper-intensive derivative products on Wednesday.
Early on Thursday, Germany released the preliminary estimate of the July Consumer Price Index (CPI), which rose 0.3% in the month and 2% from a year earlier, above the 0.2% and 1.9% expected. As for the US, the country reported that the core Personal Consumption Expenditures (PCE) Price Index was up 2.8% YoY in June, matching May’s reading. Finally, weekly unemployment claims were up by 218K, better than the 224K anticipated by market players.
EUR/USD short-term technical outlook
The EUR/USD pair corrected modestly higher from its intraday low, but met sellers around 1.1460, currently hovering around the 1.1430 level. Technical readings in the daily chart show that the risk remains skewed to the downside, as technical indicators consolidate near their recent lows well into negative territory. Even further, the 20 Simple Moving Average (SMA) accelerated south above the current level, standing at around 1.1650.
In the near term, the EUR/USD pair is poised to extend its slide. The 4-hour chart shows technical indicators are resuming their slides within negative levels, after correcting extreme oversold conditions. At the same time, an almost vertical 20 SMA collapsed below the 100 and 200 SMAs, reflecting sellers’ dominance.
Support levels: 1.1400 1.1360 1.1325
Resistance levels: 1.1470 1.1510 1.1555
