Technical Analysis

EUR/USD Price Analysis – Aug 10, 2023

By LonghornFX Technical Analysis
Aug 10, 20233 min

Daily Price Outlook

The EUR/USD currency pair is showing strong optimism as the Euro (EUR) continues its upward journey against the US Dollar. Thanks to encouraging US inflation numbers, the pair reached exciting new heights around 1.1065. This persistent positive sentiment, coupled with a growing appetite for risk, is playing a role in the Greenback's decline, which was seen as a key factor that kept the EUR/USD currency pair higher.

Driving Factors Behind EUR/USD Upward Momentum

However, the reason for its upward surge can be linked to recent progress in key economic indicators. The German Harmonized Index of Consumer Price (HICP) stood at 6.5%, in line with market expectations. Similarly, Eurozone Sentix Investor Confidence improved, rising from -22.5 in July to -18.9 in August, surpassing the expected -23.4.

It is worth noting, the European Central Bank is set to release the Economic Bulletin, a report that might offer insights into their monetary outlook for the year. These elements together shape the direction of the EUR/USD currency pair.

US Dollar's Trajectory and Inflation Influence on EUR/USD

Looking at the other side of things, the movements of the US dollar lately are influenced by what officials from the Federal Reserve (Fed) are talking about. It looks like they're moving away from raising interest rates and leaning more towards keeping them steady. For example, Philly Fed's Patrick Harker mentioned not changing rates, and Atlanta Fed's Raphael Bostic believes there's no need for more rate hikes.

But what really matters for people who invest is the US inflation numbers. If inflation stays low, the US dollar might become weaker, which could give a slight boost to the EUR/USD pair. In general, most investors think the Fed will keep the rates where they are now, while the European Central Bank (ECB) is working out how to tighten things up after the summer.

Influential US CPI and PPI Data Impact on EUR/USD

Looking ahead, our attention shifts to the upcoming US Consumer Price Index (CPI) report scheduled for Thursday. This data is really important because it helps the Federal Reserve (Fed) decide what to do with interest rates, which also affects the direction of EUR/USD. Predictions say that US inflation might go up a bit from 3% to 3.3%, and the core rate is expected to stay around 4.8%. These numbers are super important for investors, and they could guide how the EUR/USD currency pair moves based on what the Fed does and how people feel in the market.

EUR/USD Price Chart – Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

EUR/USD - Technical Analysis

The EUR/USD pair has maintained a sideways and narrow trajectory since yesterday. It's worth noting that the EMA50 indicator continues to exert downward pressure on the price, thus sustaining the bearish trend scenario. The confirmation of this scenario hinges on the breach of the 1.0955 level, which would validate the extension of the bearish movement toward the 1.0880 level.

The presence of a double top pattern's negative influence enhances the likelihood of further anticipated declines in the forthcoming sessions. It's crucial to emphasize that the continuity of the bearish trend necessitates staying below the 1.1030 level.

For today, the projected trading range spans from the support level of 1.0900 to the resistance level of 1.1030.



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