Fundamental Analysis
EUR/USD gave up intraday gains and slipped below 1.1100 after hitting a fresh weekly high of 1.1150 during Friday’s North American session. The broad currency pair’s gains were offset by a solid recovery in the US Dollar (USD). The US Dollar Index (DXY), which tracks the greenback against six major currencies, rose to near 101.40 after reversing intraday losses.
Signs of slowing labour demand have fuelled market expectations that the Federal Reserve (Fed) could start cutting interest rates aggressively.
The ECB is widely expected to cut interest rates again at its September meeting. The central bank started the policy easing process in June but left its key lending rate unchanged in July. In the final quarter of the year, traders remained divided on whether the ECB would cut at its November or December meeting, or both.
Technical Analysis
The bounce and high of 1.115 has created a new bearish channel for EURUSD. On the 4-hour time frame, the two EMAs have come together, indicating that the bullish momentum is not as strong as last week and that a trend reversal is in order. The narrow price range that the pair formed last week at 1.113 and 1.101 is widening as a break from the narrow range could see the pair reach last month’s high around 1.119 and on the upside, the support at 1.095 will keep the pair in the long-term bullish channel.
Support: 1.101-1.095
Resistance: 1.115-1.119
Trading Signals
SELL EURUSD zone 1.119-1.121 Stoploss 1.123
BUY EURUSD zone 1.095-1.093 Stoploss 1.091