Key Highlights: EUR/USD faces downward pressure after US ISM Services PMI data, with a stronger US Dollar limiting the Euro’s gains. The pair remains near 1.1550, with potential support and resistance levels defining short-term price action.
EUR/USD Technical Overview: Bearish Momentum Continues
The EUR/USD pair is trading in negative territory on Tuesday, hovering around 1.1550, as the US Dollar recovers following weaker-than-expected Eurozone economic data. The ISM Services PMI data released by the US showed a slight decline to 50.1 in July, down from 50.8 in June, limiting the Euro’s losses. While the pair’s downside momentum has slowed, the outlook remains bearish due to the USD’s strength.
Technical Indicators Favor a Downward Extension
- The daily chart for EUR/USD shows the pair continues to trade below the 20 Simple Moving Average (SMA), which offers dynamic resistance near 1.1630.
- Technical indicators have failed to break their midlines, reinforcing the selling pressure and signaling a potential continuation of the downward trend.
- The 100 SMA is also positioned below the current price, although it is losing momentum, which aligns with the diminishing buying interest in the pair.
On the 4-hour chart, the risk of further decline is limited, as EUR/USD remains below both the 100 and 200 SMAs, but a bullish 20 SMA near 1.1505 could attract buying interest if reached.
Key Support and Resistance Levels:
- Support Levels: 1.1505, 1.1470, 1.1420
- Resistance Levels: 1.1560, 1.1600, 1.1630
Fundamental Overview: Market Sentiment and Economic Data
The US Dollar remains the dominant force in the market, with moderate demand pushing EUR/USD lower to 1.1530. On the US side, the Federal Reserve is widely expected to announce an interest rate cut in September, which continues to support USD strength. Mary Daly, President of the San Francisco Fed, confirmed the possibility of rate cuts, citing signs of a softening US job market and absence of tariff-driven inflation.
Meanwhile, the Eurozone has shown mixed economic signals. The Hamburg Commercial Bank (HCOB) released the final July Services PMI, confirming an uptick to 51.0, surpassing the June reading of 50.5, though still reflecting a slowdown in business activity. The Eurozone Composite PMI stood at 50.9, a slight improvement from 50.6 in June, yet weaker than the initial forecast.
Additionally, Eurozone Producer Prices (PPI) rose by 0.8% month-over-month and 0.6% year-over-year, showing continued price pressure, though not enough to reverse the bearish sentiment towards the Euro.
The EU’s decision to delay counter-tariffs on the US for six months adds some relief to market sentiment, but any escalation in trade tensions could still weigh on the Euro against the GBP and USD.
Upcoming Data: Eyes on US PMI Reports
Later in the US session, traders will look for insights from the US S&P Global Services and Composite PMIs, along with the official ISM Services PMI for July. These reports may influence further expectations for the Fed’s rate decisions and continue to shape the USD’s performance.
Summary: EUR/USD Faces Bearish Outlook Amid US Dollar Strength
- EUR/USD remains under pressure near 1.1550, with US Dollar demand driving the pair lower.
- Weak Eurozone data, including the HCOB Services PMI and Germany’s factory orders, contribute to the bearish sentiment in EUR/USD.
- The BoE rate cut expectations and Fed’s dovish stance continue to weigh on market dynamics, with the potential for a rate cut in September playing a key role in USD strength.
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