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MENAFN- Daily Forex) EUR/USD Analysis Summary Today
Overall Trend: Bullish. Today's EUR/USD Support Levels: 1.1735 – 1.1640 – 1.1570. Today's EUR/USD Resistance Levels: 1.1840 – 1.1920 – 1.2000.
EUR/USD Trading Signals:
Sell EUR/USD from the resistance level of 1.1870 with a target of 1.1500 and a stop-loss at 1.2000. Buy EUR/USD from the support level of 1.1640 with a target of 1.1880 and a stop-loss at 1.1560.
EUR/USD Technical Analysis Today:
As anticipated, the EUR/USD pair has continued its strong upward momentum, with gains extending to the 1.1830 resistance level, the highest for this prominent currency pair in the forex market since August 2021. The Euro's gains intensified as investors assessed comments from European Central Bank (ECB) policymakers following the Eurozone's inflation rate reaching the ECB's 2% target.
Speaking at the ECB Forum on Central Banking, ECB President Christine Lagarde welcomed the June inflation data, which came in as expected, but cautioned about "two-sided risks" stemming from increasing economic fragmentation and escalating geopolitical tensions. At the same time, other ECB officials indicated that interest rates are likely to remain stable at this month's meeting, after eight consecutive deposit rate cuts since June 2024. This caution is amid ongoing concerns about global trade tensions, instability in the Middle East, and the Euro's recent strength.
The single European currency also found support from a weaker US dollar, as markets continue to anticipate Federal Reserve interest rate cuts despite uncertainty surrounding the impact of tariffs imposed by US President Trump.
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We advise monitoring EUR/USD selling levels rather than considering buying in hopes of further gains the EUR/USD pair reach the 1.20 level?
According to forex market experts, the EUR/USD trend remains positive; the medium-term trend is still upward and optimistic, as we've observed a multi-month sequence of higher lows and higher highs since March. The 1.1800 resistance will remain a key target for bulls, but keep in mind that technical indicators are heading towards overbought territory, led by the 14-day RSI (Relative Strength Index) and the MACD (Moving Average Convergence Divergence) indicator. Overall, we foresee continued US dollar risks and further EUR/USD gains; however, the current combination of negative risks for the US dollar makes the first half of July one of the best opportunities for a potential breakthrough of the 1.2000 psychological resistance.
These forecasts come as we approach mid-2025, a year characterized by a significant depreciation of the US dollar. In fact, it's the worst start to a year for the US dollar since 1973, when it became a fully free-floating currency. It's often said that US President Donald Trump's policies are the main driver for the US dollar, but not enough is said about China, one of the most important factors facilitating these declines.
In this regard, trading experts added that the pace of China's currency adjustment will influence the pace of the US dollar's decline, which in turn will affect the pace of other global currencies. "Emerging European currency markets, as expected, are leading this field, as is the Euro, and I feel there is a significant impact on the price right now."
As is well known, China manages the Yuan (CNY) through a daily fixing mechanism. When it allows the Yuan to appreciate (i.e., lowers the USD/CNY rate), it typically reflects its intention to absorb more global capital and reduce trade imbalances. China has pursued a stable Yuan policy that benefits its exporters by artificially keeping the exchange rate low.
However, in response to Trump's efforts to rebalance US trade, there is an implicit understanding by Chinese authorities that their currency needs to be allowed to depreciate. This has global consequences, as a stronger CNY usually means widespread weakness for the US dollar. Traders also interpret lower USD/CNY rates as a signal to broadly sell the US dollar.
Trading experts forecast that for the EUR/USD to surpass the 1.2000 psychological resistance, the USD/CNY exchange rate would need to approach 7.0000. As of July 1, the USD/CNY exchange rate was 7.16, and the EUR/USD exchange rate was currently at 1.18000.
EURUSD Chart by TradingViewEuro gains reach overbought levels
According to performance on the daily chart and across reliable trading platforms, the EUR/USD gains have pushed technical indicators towards strong overbought levels. This is clearly visible in the direction of the 14-day RSI (Relative Strength Index), which has breached the 70 lines, confirming overbought conditions. Also, the MACD (Moving Average Convergence Divergence) lines. Consequently, if the EUR/USD receives new strong momentum, the currency pair could be subject to profit-taking selling.
Furthermore, we expect the euro dollar price to remain stable around its gains until the markets react to the announcement of US jobs numbers at the end of the week, which in turn affects market expectations for future Federal Reserve policy. Today, the euro dollar price may react to the announcement of the eurozone unemployment rate at 12:00 PM. Cairo time. Then expected statements from the Governor of the European Central Bank, Lagarde.
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