- The EUR/USD struggles for a firm direction in the short term while the operators wait for the crucial FOMC meeting.
- The recent rupture below the 100 periods SMA in the 4 -hour graph favors bassists.
- However, the mixed technical configuration justifies caution before positioning for additional losses.
The EUR/USD pair reverses a decrease in the Asian session to the region of 1,1280-1.1275 on Tuesday and reaches a new daily maximum in the last hour, although it lacks a strong shopping follow-up. Cash prices remain confined in a negotiation range of several days, about the minimum of three weeks reached last Thursday, while operators choose to stay out of the crucial decision of the FOMC on Wednesday.
Facing the risk of the key event of the Central Bank, the optimistic US employment data on Friday and the PMI of services of the US ISMs published on Monday relieved market concerns about a recession. This, in turn, helps to limit the decline of the US dollar (USD) and acts as a wind against the Eur/usd torque. However, the growing economic uncertainty led by the rapid changing approach to US President Donald Trump about commercial policies keeps the USD’s bulls on the defensive.
From a technical perspective, the rupture of last week below the simple mobile average (SMA) of 100 periods in the 4 -hour graph – for the first time since the beginning of April – was seen as a key trigger for bassists. However, the oscillators in this graph do not yet confirm a negative bias and remain in upward territory in the daily graphic. This makes it wise to expect a strong sales tracking before positioning itself for any significant depreciative movement.
Meanwhile, the SMA of 100 periods in the 4 -hour graph, currently located around the 1,1380 region, could act as an immediate obstacle before the round figure of 1,1400. A sustained strength beyond the latter should allow the EUR/USD to overcome the intermediate barrier of 1,1425-1.1430 and point towards recovering the psychological brand of 1,1500. The impulse could extend even more towards the peak of several years, around the 1,1575 region reached in April.
On the other hand, the region of 1,1265, or a minimum of three weeks reached last Thursday, could offer immediate support and should act as a key point. A convincing rupture below should pave the way for an extension of the Corrective sliding of the EUR/USD torque from the 1,1575 zone, or the highest level since November 2021 reached last week. Cash prices could then weaken towards the round figure of 1,1200 before falling to the area of 1,1140, or the 200 periods SMA in the 4 -hour graph.
EUR/USD 4 -hour graphics
Euro Faqs
The euro is the currency of the 19 countries of the European Union that belong to the Eurozone. It is the second most negotiated currency in the world, behind the US dollar. In 2022, it represented 31 % of all foreign exchange transactions, with an average daily business volume of more than 2.2 billion dollars a day. The EUR/USD is the most negotiated currency pair in the world, with an estimate of 30 %of all transactions, followed by the EUR/JPY (4 %), the EUR/GBP (3 %) and the EUR/AU (2 %).
The European Central Bank (ECB), based in Frankfurt (Germany), is the Eurozone reserve bank. The ECB establishes interest rates and manages monetary policy. The main mandate of the ECB is to maintain price stability, which means controlling inflation or stimulating growth. Its main tool is the rise or decrease in interest rates. Relatively high interest rates (or the expectation of higher types) usually benefit the euro and vice versa. The GOVERNMENT BOOK of the ECB makes decisions about monetary policy in meetings that are held eight times a year. The decisions are made by the directors of the National Banks of the Eurozone and six permanent members, including the president of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the harmonized consumer prices index (IPCA), are an important economic indicator for the euro. If inflation increases more than expected, especially if it exceeds 2% of the ECB, it forces the ECB to rise interest rates to control it again. Relatively high interest rates compared to their counterparts usually benefit the euro, since they make the region more attractive as a place for global investors to deposit their money.
Published data measure the health of the economy and can have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer trust surveys can influence the direction of the single currency. A strong economy is good for the euro. Not only attracts more foreign investment, but it can encourage the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is weak, the euro is likely to fall. The economic data of the four largest economies in the euro zone (Germany, France, Italy and Spain) are especially significant, since they represent 75% of the economy of the euro area.
Another important fact that is published on the euro is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will gain value simply by the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of 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.
