(Eren Sengezer – FXStreet)
– EUR/USD has staged a modest recovery in the early European session.
– ECB’s Kazaks says they will continue to hike rates to battle inflation.
– Focus shifts to weekly Jobless Claims and Existing Home Sales data from the US.
EUR/USD has managed to erase a small portion of its daily losses after having tested 1.0150 in the early European session. The near-term technical outlook suggests that the bearish bias stays intact but the shared currency seems to be holding its ground on hawkish comments from European Central Bank (ECB) officials.
European Central Bank (ECB) executive board member Isabel Schnabel said earlier in the day that there were a number of indicators pointing to a risk of de-anchoring inflation expectations. Schnabel further noted that inflation concerns before the July rate hike had not been alleviated. Additionally, ECB Governing Council member Martins Kazaks said that they will continue to raise interest rates with the goal of not allowing inflation to become entrenched. Schnabel is scheduled to speak again at 1715 GMT later in the day.
In the second half of the day, the weekly Initial Jobless Claims and July Existing Home Sales data will be featured in the US economic docket. Earlier in the week, we saw some dollar weakness on disappointing Housing Starts data and a similar market reaction could be witnessed in case there is a significant decline in Existing Home Sales.
Meanwhile, US stock index futures trade in negative territory following the heavy daily losses registered in Wall Street’s main indexes on Wednesday. In case safe-haven flows continue to dominate the financial markets in the second half of the day, EUR/USD could have a difficult time gathering recovery momentum.
EUR/USD Technical Analysis
EUR/USD stays within a touching distance of 1.0150 support, where the Fibonacci 23.6% retracement of the latest downtrend is located. If that level fails, interim support seems to have formed at 1.0120 (static level) ahead of 1.0100 (psychological level, static level) and 1.0050 (static level).
On the upside, the 200-period SMA on the four-hour chart aligns as immediate resistance at 1.0180 before 1.0200 (100-period SMA) and 1.0230 (Fibonacci 38.2% retracement).
Read Forex Forecast: Gold, USD/JPY, GBP/USD, AUD/USD, USD/CAD
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