EUR/USD Analysis Today - 13/08: Back To Resistance? (Chart)


(MENAFN- Daily Forex)

  • Recently, the EUR/USD exchange rate has consolidated its gains made in early August in recent trading, but it may have room to decisively overcome the nearby resistance around 1.0935 and approach the 1.10 level in the coming days.
  • According to reliable trading platforms, the EUR/USD pair did not change much last week after giving up the big gains the pair made on Monday over the following days.
  • Moreover, the losses were limited to a small part of the progress it made in early August, and the trend remains up.

This is due to the significant increase on August 5th when US jobs data for July surprised expectations sharply, prompting markets to bet on multiple US interest rate cuts by the end of the year. Commenting on the performance of the currency pair and the influencing factors, Jane Foley, head of FX research at Rabobank, said on Friday: 'We have largely removed our three-month target of 1.05 for the EUR/USD pair based on the view that imminent interest rate cuts by the Federal Reserve are likely to prevent a decline to this level this year.' The analyst added,“For now, we continue to favor selling EUR/USD on any moves towards 1.10”.

The bets on an interest rate cut of up to 100 basis points have seen the euro begin to erode the technical resistance around 1.0935, and we might see the EUR/USD pair set its sights on the psychological resistance level of 1.10 this week. This is partly due to polls indicating that Democratic Party presidential candidate Kamala Harris has turned the tables on former President Donald Trump. Also, because the U.S. inflation figures for July, which will be released on Wednesday. Obviously, this data is likely to reinforce market expectations of an imminent rate cut by the Federal Reserve.

Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money

According to Rabobank analysts,“From a 3 to 6-month perspective, we see potential risks for price increases due to the weakness of the U.S. dollar rather than the strength of the euro. This could be due to a weaker-than-expected U.S. economy or a Harris win in the election, although our baseline forecast is based on a Trump victory.”

Overall, the recent shift in the polls undermines one of the key sources of support for the US dollar and its outlook through the end of the year as Trump's protectionist trade policy agenda and use of tariffs is quite positive for US business investment, output, employment and GDP. However, the consensus also sees US inflation rising 0.2% m/m when July data is released on Wednesday, with the annual rate expected to be cut to 2.9%, from 3%. Consequently, this keeps the US deflationary process intact and should weigh on the dollar as it is loosely negatively correlated with inflation.

The recent breakdown of the U.S. dollar exchange rate and the upward breakout of the EUR/USD pair suggest that the pair may be on the verge of closing the gap with its fair value, which is around 1.1577, up from 1.1511 at the beginning of the year.

This estimate is derived from the analyst's fair value model, which uses inflation, interest rates and the spreads between their cross-currencies to estimate where currencies should trade as inflation rises and falls.

On the stock trading front, US stock markets start the week with mixed performance. US stock markets struggled to maintain momentum on Monday, after a turbulent week, as investors braced for a week of crucial economic data. According to trading, the S&P 500 closed lower, the Nasdaq added 0.2% and the Dow Jones lost 140 points.

This week, according to the economic calendar, the focus will be on key indicators such as the US Consumer Price Index, Producer Price Index, Retail Sales and Industrial Production. Clearly, those data are expected to shed light on the strength of the US economy and the ongoing inflation challenges.

According to market trading, Real estate and telecommunications services led the losses of the session while technology, energy and utilities sectors closed in the green. Among the stocks, shares of Nvidia rose 4% as the chipmaker aimed to overcome concerns about its next-generation processors. In contrast, shares of Qualcomm fell 1% after its rating was downgraded from outperform to peer perform. Shares of JetBlue Airways plunged 20.7% after announcing plans to borrow $2.75 billion, using its loyalty program as collateral/USD Technical analysis and forecast:

According to the performance on the daily chart attached, the Euro against the US Dollar EUR/USD price is in a neutral position. Technically, the bulls will prevail if it succeeds in breaking the psychological resistance of 1.1000. On the other hand, and over the same period of time, the upward efforts will fail if the bears return the EUR/USD pair towards the support level of 1.0820. As we mentioned before, the EUR/USD price will remain in a narrow range until the markets and investors react to the announcement of the US inflation figures and statements by US Federal Reserve officials.

Ready to start trading the EUR/USD daily forecasts? Get our
top Forex brokers list
we recommend here.

MENAFN13082024000131011023ID1108550751


Daily Forex

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.