EURUSD
Fundamental Perspective
The EURUSD pair fluctuated considerably last week, initially falling to a three-week low of 1.0776 on Thursday but rebounding to close above 1.0900. The week was marked by significant developments, with speculation mounting that the Federal Reserve (Fed) might aggressively trim interest rates amidst tepid U.S. data and rising recession fears.
In the Eurozone, mid-week optimism was dampened by disappointing local data. The Hamburg Commercial Bank (HCOB) Manufacturing PMI for July remained at a weak 45.8, mirroring June's reading and indicating ongoing sectoral struggles. Germany reported a 0.1% contraction in GDP for Q2, though the broader EU economy grew by 0.3%, slightly exceeding expectations. Additionally, preliminary estimates showed Germany's annual Harmonized Index of Consumer Prices (HICP) at 2.6%, which is above forecasts, while the EU's core annual HICP rose to 2.9%.
The Fed's latest statement acknowledged moderating job gains and described inflation as "somewhat elevated." Fed Chair Jerome Powell suggested a potential rate cut in September if current economic trends persist, leading markets to price in at least two rate cuts by year-end and possibly three in 2024. Despite these signals, Powell emphasized that future monetary policy decisions would remain data-dependent. This nuanced stance contributed to the U.S. Dollar's selling pressure, allowing the Euro to regain some strength by the week's end.
Technical Perspective
The last weekly candle finished with a green body and long upper wick, recovering losses from the previous week. It reflects an increased bullish pressure and suggests that the next candle might be another green one.
The RSI indicator reading remains neutral in the daily chart as the indicator line slopes upside above the midline, declaring a positive force on the asset price. So, the price may head toward the nearest resistance of 1.0980, and any breakout can trigger the price toward the next resistance, which is near 1.1100.
Meanwhile, the price is floating just below a previous resistance, so a retracement is possible. On the downside, primary support is near the 1.0790 level, followed by the next support near 1.0666.
