- EUR / USD has been able to deviate somewhat from the strength of the dollar and stabilize above 1.18.
- Fed Chairman Powell’s second day of testimony is marked by uncertainty.
- Risk aversion and bearish technical indicators mean that pressures will persist.
Down, but not out: the EUR/USD it has bottomed out at 1.1803, evading the significant psychological level of 1.18 and rising above. However, the world’s most popular currency pair is still trading bearish for the day.
The US dollar is benefiting from a message of uncertainty from Federal Reserve Chairman Jerome Powell. Testifying before a Senate committee, the Fed chairman said the inflation situation is unique and also expressed uncertainty about the current low participation rates. About three million Americans have left the workforce.
Previously, jobless claims in the United States disappointed estimates with 360,000 and industrial production rose just 0.4% in June, also worse than projected. The safe-haven dollar appeared to benefit from weaker data, but that effect is fading.
Investors are watching the headlines related to infrastructure spending, and it is not yet clear whether Democrats can muster a majority to pass their $ 3.5 trillion spending bill. Republicans have made it clear that they are opposed.
Concern about the spread of the delta covid variant persists in Europe, with the Netherlands, Spain and Portugal standing out with a sharp increase in infections. These developments have affected the euro a bit.
Overall, bearish market sentiment is driving the dollar and weighing on the currency pair.
EUR / USD technical analysis
EUR / USD is experiencing a downside momentum on the four-hour chart and has fallen below the 50 SMA.
Some support awaits at the daily low of 1,803 mentioned above. It is followed by 1.1775, which is the multi-month low. Below, we see 1.1740 and 1.17.
Looking up, some resistance is at the daily high of 1.1850, followed by 1.1865 and 1.1880, which was a stubborn top last week.