Technical Analysis

EUR/USD Price Analysis – Aug 30, 2023

By LonghornFX Technical Analysis
Aug 30, 20233 min

Daily Price Outlook

The EUR/USD currency pair prolonged its upward trend and remained well bid around 1.0890 marks during the Asian session on Wednesday. However, the reason for its bullish bias can be attributed to the retreating US Dollar, prompted by the downbeat economic data from the United States on Tuesday. Meanwhile, there is no news from the European Central Bank (ECB) about potential rate decisions post-summer. Thereby, the traders await the upcoming releases of economic data from the US and Eurozone, seeking a clearer understanding of inflation scenarios in both economies.

US Economic Updates and Fed Outlook

Elsewhere, US Consumer Confidence for August dipped to 106.1 from the earlier 114.0, missing the expected 116.0. Also, in July, US JOLTS Job Openings dropped to 8.827 million, down from 9.165 million prior, contrary to the expected rise to 9.465 million. Market watchers predict the US Federal Reserve (Fed) will delay rate hikes until its September meeting. The CME's FedWatch Tool shows only an 11.5% chance of a rate hike in September.

Thus, this stance is putting downward pressure on the US dollar's value. Furthermore, at the Jackson Hole Symposium, Fed Chair Jerome Powell said their decision on the next rate hike will rely on economic data.

As a result, EUR/USD traders are waiting for new economic data from the US and Eurozone to better understand inflation in both regions. They're especially interested in US ADP Employment Change and preliminary Gross Domestic Product Annualized (Q2), which will come out later. In the Eurozone, they're keeping an eye on Consumer Sentiment, the German preliminary Consumer Price Index (CPI), and the Harmonized Index of Consumer Prices.

Eurozone Data and EUR/USD Outlook

At home, Spain saw a 2.6% rise in August's yearly inflation, while Italy's Consumer Confidence slipped to 106.5 and fell to -16 in the broader euro area. Later, all eyes will be on Germany's advanced inflation data this month. This information will likely impact the EUR/USD pair. If Germany's inflation exceeds expectations, the euro might strengthen against the US dollar. Conversely, if the figures disappoint, it could put downward pressure on the euro relative to the dollar.

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

EUR/USD - Technical analysis

The EUR/USD pair has successfully reached our anticipated target at 1.0880, encountering strong resistance at this level. This resistance is a result of the convergence of the previously breached 61.8% Fibonacci correction level with the resistance of the corrective bearish channel. Additionally, clear negative signals have emerged through the stochastic indicator.

Consequently, we hold the view that there is a valid possibility of a bearish rebound, leading to potential negative price movement in the upcoming trading sessions. The focus is on testing the 1.0785 level as a primary target. It's noteworthy that surpassing the levels of 1.0880 to 1.0890 would negate the projected decline, potentially allowing for further gains toward the 1.0955 region. The projected trading range for today is anticipated to lie between the support at 1.0785 and the resistance at 1.0925.

The anticipated trend for today is bearish.



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