Technical Analysis

EUR/USD Price Analysis – Aug 14, 2023

By LonghornFX Technical Analysis
Aug 14, 20233 min

Daily Price Outlook

Despite the recent positive news from Italy, the EUR/USD currency pair failed to stop its bearish momentum and has dropped to 1.0925 level, the lowest level in a week. However, the reason for the its decline could be linked to the stronger US dollar, which gained strength due to risk-off market sentiment. The broad-based US dollar climbed to a five-week high as a stronger-than-expected U.S. inflation reading stoking concerns that the Federal Reserve might persist in its series of interest rate hikes.

Factors Affecting EUR/USD: Italian Tax Announcement, Debt Concerns, and Global Tensions

It is worth noting that Italian Prime Minister Giorgia Meloni's announcement of a one-time 40% tax on banks has reassured that there will not be further financial difficulties for the banking sector. This strategic move has been widely regarded as one of the key factors that helps the EUR/USD pair to limit its deeper losses. On the other side, worries about debt issues in China's market and potential recession struggles in the Eurozone are putting pressure on the EUR/USD value.

Furthermore, the mixed readings from Germany's Wholesale Price Index (WPI) for July have played a major role in undermining the EUR/USD pair. Besides this, issues like China's Country Garden suspending bond trading and delayed payments from a subsidiary of Zhongzhi Enterprise Group are deepening China's debt problems. Meanwhile, the global context of Russia's missile-equipped submarines and the ongoing US-China trade tensions is promoting a risk-averse sentiment, further dampening the EUR/USD currency pair price.

EUR/USD Outlook Amid ECB Hints and Risk-Off Sentiment

Moreover, European Central Bank (ECB) officials have hinted at potential changes in their policies during recent public appearances. The ECB's monthly economic outlook underlines macro uncertainties, giving Euro bears some optimism. As a result, S&P 500 and Euro Stoxx Futures show slight declines, while US 10-year Treasury bond yields hover around 4.17%.

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

EUR/USD - Technical analysis

The EUR/USD pair has successfully breached the 1.0955 mark, sealing the daily candlestick beneath it, thus strengthening the anticipation of an extended bearish trajectory in the intraday context, with a subsequent objective set at 1.0880.

The persistent influence of the double top formation is anticipated to exert additional downward pressure, potentially leading the pair to exceed the previously mentioned target, setting its sights on 1.0785 as the subsequent bearish milestone.

Given the adverse momentum steered by the EMA50, a continued bearish sentiment is forecasted in ensuing sessions. It's pivotal to note that for this bearish momentum to persist, the pair should remain below 1.1030.

Today's trading spectrum is delineated with a support at 1.0840 and resistance positioned at 1.1000.

A bullish sentiment will prevail above 1.09249, whereas a stance below this figure leans towards bearishness.



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