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EUR/USD Technical Analysis: Looking at Inflation Figures

With the start of trading this week, the price of the euro currency pair against the US dollar EUR/USD tried to stop the pace of its losses, which extended last week to the support level of 1.0631. This is its lowest in six months, and stabilized around the level of 1.0685 at the time of writing the analysis. The euro is looking for strong factors to recover from the general downward trend . Today the focus will be on the announcement of the inflation figures for the Eurozone and if the readings are higher than expected, the Euro may find some positive momentum against the other major currencies.

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    On another level, stocks, bonds, and the US dollar saw small movements at the beginning of a busy week for the major central banks, whose decisions on interest rates will determine the style of global markets for the rest of the year. According to trades, the S&P 500 index closed near 4,450. Brent crude trimmed its gains after reaching around $95 a barrel earlier on Monday in a move that added to inflation fears. At the same time, Apple's shares rose, while Tesla's shares fell after Goldman Sachs Group Inc. Its estimates for the profits of the giant electric car company. 10-year Treasury bond yields fell, while two-year bond yields remained above 5 percent.

    Starting with the Federal Reserve meeting on Wednesday and ending with the Bank of Japan meeting two days later, monetary policy will be set at key meetings across half of the G20. Central banks in advanced economies may receive special attention as global policy makers adapt to the topic. US officials in Jackson Hole launched in August: and prices are likely to stay high for a while longer.

    With the Federal Reserve widely expected to keep US interest rates unchanged this week, traders will focus on the so-called Economic Outlook Summary. The key questions are whether policymakers will keep their expectations for another 25 basis point increase by the end of the year – and how much easing they plan for 2024. In June, they expected one percentage point of cuts.

    Expectations of the euro against the dollar today:

    • There is no change in my technical point of view on the performance of the price of the euro currency pair against the US dollar EUR/USD.
    • The general trend is still downward, considering that its recent losses have moved the technical indicators towards strong sell saturation levels.
    • I still expect the downward momentum to continue until the markets react to this week's events.
    • The highlight was led by the announcement of the US Central Bank's policy decisions and then the readings of the Purchasing Managers' Index for the manufacturing and service sectors for the Eurozone economies.

    According to the general downward trend, the nearest targets of the bears are the support levels 1.0600, 1.0550 and 1.0480, respectively. From the second and last level, it is best to return to buying the currency pair with no risk. On the other hand there will be no first break in the downward direction without first moving towards the resistance level 1.0825.

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    Mahmoud Abdallah
    About Mahmoud Abdallah
    Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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