In this market analysis, we delve into the recent price movements of the EUR/USD currency pair. With the euro and the US dollar engaged in a tug-of-war, traders are closely monitoring key levels to identify potential opportunities. Our analysis will provide insights into the current state of the pair and offer a decision signal to guide your trading strategy.
Price Action Overview:
As of 5th July 2023, at 15:42, EUR/USD has been hovering around the 1.0900 mark, displaying choppiness and uncertainty in midweek trading. The immediate downside support level is observed at the 1.0830 region, which presents a contention zone for the pair.
To reignite the uptrend and challenge the 2023 top below 1.1100 (April 26), it is crucial for EUR/USD to surpass the June peak at 1.1012 in the near term. Breaking this resistance level would indicate a potential bullish momentum and a favorable environment for buyers. However, a failure to breach this hurdle could trigger selling pressure, leading to a revisit of the weekly low at 1.0835 (June 30) and the transitory 100-day SMA, currently positioned at 1.0823.
When considering the broader picture, a positive outlook for EUR/USD remains intact as long as the pair stays above the 200-day SMA, which is presently situated at 1.0608. This long-term support level suggests that the euro holds a position of strength against the US dollar.
Expert Analysis by Scotiabank:
Economists at Scotiabank have also analyzed the technical outlook for EUR/USD. They highlight that while short-term trends exhibit a soft undertone, there is currently no significant driving force pushing the euro lower. Recent downward movements have found strong support around the 40-Day Moving Average (currently at 1.0828), and the support levels in the low to mid-1.08 range are expected to remain firm.
Key Decision Signal:
Considering the analysis provided, our recommendation for the EUR/USD currency pair is to monitor the break above the resistance level at 1.0910. A confirmed breach of this level, following the June 22nd high, could provide renewed upside momentum and serve as a signal to retest the 1.10 mark.