- The bears' control of the direction of the EUR/USD currency pair intensified, and the losses this week reached the support level at 1.0875, the lowest for the currency pair in five weeks, and settled around 1.0903 at the time of writing.
- In general, the euro against the dollar may take cues from the market sentiment in general throughout the week, as there are no strong and important major reports due from the eurozone.
- On the other hand, the US dollar may be driven by the minutes of the FOMC meeting, because the US central bank's hawkish statements may mean more bullishness for the US currency.
After all, the prospect of higher borrowing costs could raise demand for dollars while keeping investors on edge from a recession. Fed Chair Powell kept the door open for a September rally in his latest announcement, indicating that they are still waiting for jobs and inflation data before making a decision. The latest US NFP jobs report came in weaker than expected, as did most CPI readings. This could limit potential US dollar gains in the Fed's hawkish minutes or accelerate dollar selling if other policymakers move towards keeping interest rates on hold for the rest of the year.
The US economy remained more resilient than expected despite higher interest rates. Yesterday's report showed that sales growth at US retailers accelerated in July more than economists had expected. The strong retail sales report raises hopes that the US economy can continue to grow and avoid a long-expected recession. On the downside, it could also increase the Fed's resolve to keep interest rates high in order to bring down inflation entirely.
For its part, the Fed has already raised its key interest rate to the highest level in more than two decades. High rates work by directly affecting the entire economy and hurting investment prices.
EUR/USD Technical Outlook
EUR/USD retreated through support at a minor psychological mark at 1.0950 and rebounded from a low of 1.0877. And the price may be to retest the previous floor, which may now hold as resistance. The Fibonacci retracement tool shows that this is in line with the 38.2% Fibonacci retracement level, which could be enough to keep the gains in check and send EUR/USD down to the swing low or lower. The biggest correction might reach 50% Fibonacci at 1.0976 near the dynamic resistance at the moving averages or 61.8% near the key psychological mark at 1.1000.
On the subject of moving averages, the 100 SMA crosses below the 200 SMA to confirm the continuation of the bearish trend for the currency pair. Or there is an opportunity to resume selling. However, the stochastic is still in the middle of the road to reflect consolidation, although the oscillator is pointing up.
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