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  • EUR/USD Forex Technical Analysis – Under pressure from pessimism about the outlook for the global economy

EUR/USD Forex Technical Analysis – Under pressure from pessimism about the outlook for the global economy

By on July 1, 2022 0

The euro traded lower in late trading on Friday as pessimism about the outlook for the global economy boosted demand for the safe-haven US dollar.

The single currency sits just above a 5-year low, with data on Friday showing eurozone inflation hit a new high in June, while the bloc’s manufacturing output fell for the first time. times in two years.

Meanwhile, the greenback grabbed a bid even as worries about an economic slowdown pushed benchmark 10-year U.S. Treasury yields to one-month lows.

The U.S. dollar is trapped by fears that the Federal Reserve will continue to hike rates aggressively in an effort to ease soaring price pressures, and the likelihood that this tightening will hurt the economy.

At 5:26 p.m. GMT, EUR/USD traded at 1.0394, down 0.0090 or -0.86%. The Invesco CurrencyShares Euro Trust (FXE) ETF is at $96.17, down $0.74 or -0.76%.

Looking ahead, the European Central Bank (ECB) is expected to raise interest rates this month for the first time in a decade, although economists are divided on the size of any hike.

EUR/USD daily

Short-term outlook

Traders’ reaction to the intraday pivot at 1.0427 will likely determine the direction of EUR/USD on Friday’s close.

Downside scenario

A sustained move below 1.0427 will indicate the presence of sellers. If that creates enough downside momentum, look for a test of the intraday low at 1.0366.

The removal of 1.0366 will indicate that selling pressure is building with recent potential targets at 1.0359 and 1.0354 followed by the main low of 3 Jan 2017 at 1.0339.

A failure to hold 1.0339 could trigger a short-term break in the main trough of 0.9860 on December 2, 2002.

Bullish scenario

A sustained move above 1.0427 will signal the presence of buyers. If this generates enough bullish momentum, look for a possible push towards the minor pivot at 1.0487.

Sellers could intervene in the first test of 1.0487, but breaking above it could trigger an acceleration in the short-term retracement zone from 1.0567 to 1.0616.