- The EUR/USD pair is falling towards a retracement support at the level of 1.0670.
- The 14-day RSI consolidates below the 50 level; confirming a bearish trend for the pair.
- A 14-day EMA at the level of 1.0732 could act as an immediate barrier.
EUR/USD recovers its losses from the previous two sessions, trading around 1.0690 during the Asian session on Thursday. A technical analysis of the daily chart indicates a bearish bias, with the pair consolidating within a descending channel.
Furthermore, the 14-day Relative Strength Index (RSI) is consolidating below the 50 level, suggesting timid momentum for the EUR/USD pair.
The EUR/USD pair could test the immediate pullback support at 1.0670. A further decline would reinforce the bearish bias, potentially pushing the pair towards the lower boundary of the descending channel near 1.0640.
To the upside, the EUR/USD pair could encounter immediate resistance at the 14-day EMA at 1.0732. A break above this level could lead the pair to test the psychological level of 1.0800, approaching the upper boundary of the descending channel.
More resistance appears in the vicinity of the significant 1.0900 level and a three-month high at 1.0915, recorded on June 4.
EUR/USD: Daily Chart
Euro FAQs
The Euro is the currency of the 20 European Union countries that belong to the Eurozone. It is the second most traded currency in the world, behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily volume of over $2.2 trillion per day. EUR/USD is the most traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB), headquartered in Frankfurt, Germany, is the reserve bank of the euro zone. The ECB sets interest rates and manages monetary policy The ECB’s main mandate is to maintain price stability, which means controlling inflation or stimulating growth. Its main instrument is to raise or lower interest rates. Relatively high interest rates – or the expectation of higher rates – tend to benefit the Euro and vice versa. The Governing Council of the ECB takes monetary policy decisions at meetings held eight times a year. Decisions are made by the heads of the eurozone’s national banks and six permanent members, including ECB President Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), are an important econometric data for the euro. If inflation rises more than expected, especially if it exceeds the 2% target set by the ECB, it is forced to raise interest rates to bring it back under control. Relatively high interest rates compared to their peers tend to benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases measure the health of the economy and can influence the Euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer sentiment surveys can influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment, but it can encourage the ECB to raise interest rates, which will directly strengthen the Euro. Conversely, if economic data is weak, the Euro is likely to fall. Economic data from the four largest Eurozone economies (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone economy.
Another important release for the euro is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period. If a country produces highly sought-after export products, its currency will appreciate due to the additional demand created by foreign buyers wishing to purchase these goods. Therefore, a positive net trade balance strengthens a currency and vice versa for a negative balance.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
