Key points:
The EURUSD pair moved lower as technical traders took control in a week lacking major economic news. The euro dipped below $1.0850, extending its decline from the $1.09 level.
This marks the second consecutive day of negative performance for the pair, which is now down approximately 100 pips from its mid-July peak of $1.0950, a high not seen since late March.
Pictures: EURUSD dips driven by technical analysis, as observed on the VT Markets app.
The shift in market sentiment has driven risk-averse traders toward the perceived safety of the US dollar. The American currency is seen as a stable store of value in the short term, particularly given its strong performance this year.
The US dollar index (Symbol: USDX) increased by about 3% in 2024, supported by favourable economic indicators such as persistent inflation and a robust job market.
Looking ahead, forex speculators are closely watching upcoming US economic data. The focus will be on the US GDP growth for the second quarter, reported on a quarterly basis. This data is crucial as it provides insight into the overall economic health and potential future monetary policy decisions by the Federal Reserve.
Up next, the market will turn its attention to the preferred inflation measure of the Federal Reserve – the Personal Consumption Expenditures (PCE) price index. Economists anticipate a reading of 2.6% for June, consistent with the pace in May.
These data releases are expected to introduce volatility into the market, potentially influencing the EURUSD pair’s direction.
The recent dip in the EURUSD pair offers potential entry points for those anticipating a rebound. However, traders should remain cautious and closely monitor the upcoming US economic data, which could significantly impact market movements.
Technical analysis will continue to play a critical role in navigating the current market conditions, with key support and resistance levels providing guidance for trading decisions.
