EURUSD Forecast: Euro needs to clear 1.0230 to attract buyers
(Eren Sengezer – FXStreet)
– EUR/USD has gone into a consolidation phase following Wednesday’s rebound.
– The US economy is expected to expand by 0.4% in the second quarter.
– Euro could attract bulls in case it manages to clear 1.0230 resistance.
EUR/USD has lost its bullish momentum after having gained nearly 100 pips in the late American session on Wednesday. The pair trades near the upper limit of its 10-day old range and needs to clear the 1.0230 level to continue to push higher.
Although the US Federal Reserve hiked its policy rate by 75 basis points (bps) to the range of 2.25-2.5% on Wednesday, the dollar faced heavy selling pressure. During the press conference, FOMC Chairman Jerome Powell said that they will not be offering any rate guidance from now on and added that they will adopt a “meeting-by-meeting” approach. Following these comments, the probability of one more 75 bps rate increase in September dropped to 30% from 47.3% a week ago.
Later in the day, the US Bureau of Economic Analysis will release its first estimate of the second quarter Gross Domestic Product (GDP) growth. The US economy is forecast to expand at an annualized rate of 0.4% following the first quarter’s 1.6% contraction.
According to the CME Group’s FedWatch Tool, markets are pricing in a 30% probability of one more 75 bps hike in September. With a stronger-than-expected GDP print, hawkish Fed bets could return and help the dollar regather its strength. On the other hand, EUR/USD recovery could pick up steam in case the US economy fails to rebound. The US Department of Labor’s weekly Initial Jobless Claims data will also be featured in the US economic docket.
Meanwhile, the data from the euro area showed that the Consumer Confidence Index declined to -27 in July from -23.8 in June. Additionally, the Economic Sentiment Indicator fell to 99 from 103.5 in the same period.
EURUSD Technical Analysis
The Fibonacci 38.2% retracement level of the latest downtrend forms strong resistance at 1.0230, which is also the upper limit of the 10-day-old trading range. With a four-hour close above that level, the pair could target 1.0300 (psychological level, Fibonacci 50% retracement) and 1.0320 (200-period SMA on the four-hour chart).
On the downside, 1.0200 (50-period SMA, psychological level) aligns as initial support before 1.0150 (Fibonacci 23.6% retracement, 100-period SMA) and 1.0100 (psychological level, static level).
EURUSD outlook: Bearish tone to prevail below pivotal 1.0270 Fibo barrier
(Slobodan Drvenica – Windsor Brokers)
The Euro reduced speed on Thursday after post-Fed 0.83% jump and still holding below pivotal Fibo barrier at 1.0270 (38.2% of 1.0786/0.9952 descend) where bulls were trapped last week.
Support from unclear signals about the size of Fed’s rate hikes in coming policy meetings that disappointed many and deflated dollar, is likely to be short-lived.
The Euro remains very vulnerable to weak economic data from the EU and growing concerns about gas supply shortage that may limit the recovery.
Unless the action makes a clear break above 1.0270 pivot that would improve near-term structure and spark further advance, the downside is likely to remain at risk, with loss of 1.0100 zone trough (July 26/27 lows) to open way for fresh attack at parity level and retest of 20-year low at 0.9952 (July 14).
Daily studies remain bearishly aligned overall, though momentum has strengthened and probing into positive territory, but risk is expected to remain skewed to the downside as long as action holds below 1.0270.
Slightly better than expected German CPI data and hints that inflation may have peaked, with focus on US GDP data, due later today, which is expected to provide fresh signal.
Res: 1.0234; 1.0270; 1.0293; 1.0349.
Sup: 1.0185; 1.0149; 1.0096; 1.0000.
EUR/USD: Euro rebound will last?
(Vasilis Tsaprounis – TopFX)
After a relatively expected meeting the federal central bank of the US did not surprise the markets and announced an increase in interest rates by 75 basis points.
The common European currency recorded some gains in the aftermath of the session with which however it simply erased the previous losses as it remains at levels close to 1,02.
Central bank chairman Jerome Powell was quite ambiguous in his messages to the market. Many investors were concerned that the central banker comments would be more worrying for the course of the US economy so a softer approach created euphoria in International stock markets. So there have been some liquidations from the US currency as traditionally been a safe haven currency.
Perhaps this was a wishful thinking and the international stock markets are not yet in a phase for upward momentum.
The euro after the first strong bullish reaction shown brief signs of fatigue and seems to struggle to approach the critical level of 1,0280-1,03 with the chances of new pressures remaining.
Important data on inflation in the eurozone and the development path of the US economy are expected during the day and a significant divergence from the expected is likely to give a direction to the pair.
A hold mode at the moment with buys in new dips of the pair remains our favorite strategy in such conditions.