Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The EUR/USD pair has been under pressure in recent weeks, primarily driven by softer inflation data in both the Eurozone and the United States. While the ECB is expected to cut interest rates in September, market expectations for an aggressive pivot by the Federal Reserve have been tempered by lingering inflationary pressures. Technical indicators suggest that the pair may be oversold in the short term, but the broader trend remains supportive.
The Eurozone’s recent inflation data has provided a significant boost to expectations for a rate cut by the ECB in September. With the headline inflation rate decelerating to 2.2% in August from 2.6% in July, and core inflation also showing signs of moderation, the ECB’s path towards policy easing seems more likely.
Meanwhile, in the United States, the PCE inflation report for July revealed a slower-than-expected rise in price pressures. While this data suggests that the Federal Reserve may have more flexibility to ease its monetary policy, the persistence of some inflationary stickiness has tempered market expectations for an aggressive pivot towards policy normalization.
The combined impact of softer inflation data in both the Eurozone and the United States has led to a decline in the EUR/USD pair. The major currency pair has traded below 1.1100 in recent sessions, reflecting the weakening euro against the US dollar.
Technical Factors:
From a technical perspective, the EUR/USD pair is currently trading within Thursday’s trading range, below the crucial resistance level of 1.1100. The near-term outlook for the pair remains supportive, with all short-to-long-term Exponential Moving Averages (EMAs) sloping higher. Additionally, the pair holds the breakout of a Rising Channel formation on a daily timeframe.
However, the 14-day Relative Strength Index (RSI) has declined below 60.00, suggesting that the pair may be oversold. On the upside, the recent high of 1.1200 and the July 2023 high at 1.1275 represent potential targets for the Euro bulls. On the downside, the psychological support level of 1.1000 is expected to provide some cushion.
