Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.0800.
• Add a stop-loss at 1.0900.
• Timeline: 1 day.

Bullish view

• Set a buy-stop at 1.0870 and a take-profit at 1.0930.
• Add a stop-loss at 1.0800.

The EUR/USD retreated on Tuesday and resumed the recent downward trend as the US dollar strength resumed. The pair dropped to a low of 1.0828, the lowest level since July 6th of this year.

US home sales retreat

The EUR/USD exchange rate slumped after the US published a new set of weak housing numbers. In a statement, the National Association of Realtors said that existing home sales dropped by 2.2% in July from June to 4.07 million. This was the biggest decline since January.

The report cited the soaring mortgage rates, which have moved to 7% for the fall. At the same time, there is an increasing supply shortage in the housing sector as inventories remain at the lowest level in years.

The US will publish the latest new home sales data on Wednesday. Economists expect the data to show that new home sales rose to 706k in July from the previous month’s 697k. These numbers will have a moderate impact on the EUR/USD pair.

The other important data to watch on Wednesday will be the upcoming US and European flash manufacturing and services PMI numbers. Economists expect the data to show that the US services PMI remained unchanged at 52.3 in August while the manufacturing figure rose from 49.0 to 49.4 in August.

In Europe, analysts expect that the bloc’s services PMI dropped from 50.9 in July to 50.5 in August while the manufacturing figure dropped from 42.7 to 42.6. A key concern about the European economy is that natural gas prices have jumped in the past few weeks.

The main mover for the EUR/USD pair will be the upcoming Jackson Hole Summit. This is an annual summit of central bank officials, where they deliberate on key issues in the economy. They also guide on what to expect in the near term.

EUR/USD technical analysis

The EUR/USD pair attempted to recover on Monday and found resistance at 1.0928. This was an important price since it coincided with the upper side of the descending black channel.

The pair also dropped below the 50-period moving average and last Friday’s low of 1.0844. It is approaching the crucial support at 1.0834 (June 30th and July 6th low). The Relative Strength Index (RSI) has also drifted downwards.

Therefore, the EUR/USD pair will likely continue falling on Wednesday as focus remains on the upcoming Jackson Hole Summit. The key level to watch will be at 1.0800.

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