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    US dollar gains momentum as euro dips below its weekly peak 

    July 25, 2024

    Key points: 

    • The euro slipped further below its weekly peak, driven by technical trading. 
    • The US dollar continues to gain strength, supported by strong economic data. 
    • Upcoming US GDP and PCE data are expected to influence market movements. 

    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. 

    The chart displays the EUR/USD exchange rate on a 15-minute interval. The trend is down by -0.06%, with the opening price at 1.08396 and closing at 1.08333. The high was 1.08455 and the low was 1.08282. The moving averages (5, 10, 20, 30) indicate a bearish momentum, particularly notable after a sharp decline. The MACD (12, 26, 9) histogram shows a negative trend, with increased selling pressure reflected in the trading volume spikes during the price drop. This chart highlights a minor downward movement in the Euro against the US Dollar

    Pictures: EURUSD dips driven by technical analysis, as observed on the VT Markets app.  

    Market dynamics in the US 

    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. 

    Upcoming economic data to look out for 

    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. 

    Market opportunities for day traders 

    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. 

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