EUR/USD Technical Analysis: Anticipating Lagarde's Comments

(MENAFN- Daily Forex) Amid a temporary halt in the gains of the US dollar, the price of the pair EUR/USD gained some momentum to achieve gains that reached the level of 1.0025 at the time of writing the analysis. A temporary recovery from the recent collapse of the currency pair towards the 0.9865 support level, the lowest in 20 years. Despite the rebound, the general trend of the currency pair is still bearish, and the US dollar is still stronger than expectations of a US interest rate hike. The Euro faces a bleak energy future in the Eurozone and less opportunity for tightening compared to the future of US monetary policy.

Advertisement SEE FOR YOURSELF WHY EUR/USD IS THE MOST TRADED PAIR TRADE EUR/USD NOW

The Bundesbank said in its monthly report that there are increasing signs that the German economy is sliding into recession. The central bank said real GDP is likely to decline somewhat in the current quarter and shrink significantly in the winter months. The Bundesbank cited the extremely tense situation in post-war energy supplies in Ukraine as the main reason for the current weakness.

“High inflation and uncertainty regarding energy supplies and costs are not only affecting the gas and electricity-intensive industry, their export business and investment but also affecting private consumption and its dependent service providers,” said experts at the Bundesbank.

Analysts expect a noticeable decline in economic output in the fourth quarter as well as in the first quarter of next year. The bank noted that the outlook is highly uncertain. Despite the deteriorating economic outlook, the bank expects the labor market to remain resilient. Regarding the price, experts said that with the expiration of the subsidy on September 1, there were jumps in the prices of gasoline and diesel. This would lead to renewed increases in the prices of energy and services in the current month and a corresponding increase in the rate of inflation.

The Bundesbank added that inflation is expected to move into the double digits in the next few months.EUR/USD Technical Analysis

Preliminary data from the statistics agency Eurostat showed construction production in the eurozone grew for the first time in five months in July. Construction production rose 0.3 percent month-on-month in July, reversing a 1.2 percent decline in June, after being revised from 1.3 percent previously.

Production in the construction sector made a positive contribution of 0.3 percent, while civil engineering activity contracted by 0.6 percent, albeit at a slower rate than a month ago. On an annual basis, growth in construction production improved to 1.5 percent in July from 1.3 percent in June. June's rate was revised up significantly from 0.1 percent. Construction production in the EU27 rose 0.2% monthly and 1.3% annually in July. Among the member states, the largest annual increase in construction production was observed in Slovenia, Romania, and Austria, while the worst declines were seen in Sweden, Spain and the Czech Republic.EUR/USD Forecast

• The general trend of the EUR/USD currency pair is still bearish and stability below the parity price supports the bears' stronger control of the trend.
• Despite the movement of technical indicators towards oversold levels, the continuation of the weakness factors of the currency pair, especially the future of US interest, affects the morale of investors to think of sniping buying opportunities.
• Currently, the closest support levels for the euro are $0.9965 and 0.9880, respectively.

On the other hand, according to the performance on the daily chart, breaking the 1.0200 resistance will be important for a first breach of the trend. Today, the euro will interact with statements by European Central Bank Governor Lagarde, and any hard signals from them will have a positive impact on the euro against the rest of the major currencies.

Ready to trade our Forex analysis today? We've made a list of the best brokers to trade Forex worth using.

MENAFN20092022000131011023ID1104896523