Daily technical analysis EUR/USD: Awaiting key events


- Advertisement -

The EUR/USD failed to hold on to yesterday’s early gains and continued its losses to the 1.073 support level, its lowest level in more than a month, as political uncertainty in France weighed on market investor sentiment.

French President Emmanuel Macron called for early parliamentary elections in response to the far-right’s success in the European Parliament elections.

While Macron will retain his presidency and authority over both foreign policy and defense, his ability to push through legislation could be affected by the outcome of the elections and the appointment of the new prime minister. There is also the possibility of fears that the president will resign if his political party performs poorly in the upcoming elections, which would increase concerns about France’s economic situation.

Meanwhile, the European Central Bank last week made its first interest rate cut in five years, although it took a cautious approach to the possibility of further cuts. On the other hand, the U.S. Federal Reserve will leave the federal funds rate unchanged in its monetary policy decision today, Wednesday. Traders are likely to react to the updated economic estimates and expectations on the interest rate chart. In addition, a decrease in the estimated interest rate cuts in the U.S. from three to two or even one this year could mean a significant rebound in the dollar across the board.

Europe’s stock market continued to lose for the third day in a row, led by banks. According to trading, banking stocks led the way in losses, with a decline of more than 2%, including Société Générale (-5%), BNP Paribas (-4%), UniCredit (-3.6%), Deutsche Bank (-2.9%) and Banco Santander (-2.1%).

European stock indices continued to lose ground for a third session on Tuesday, with the Stoxx 50 and Stoxx 600 indices losing close to 1% as a result of concerns about the political turmoil in France.

Traders were also cautious ahead of today’s Federal Reserve monetary policy decision.

EUR/USD daily technical analysis for June 12th:

The euro (EUR) recently declined against the US dollar (USD), breaking below the key psychological support level of 1.0800 and making a low of 1.0730 before rebounding. From a technical view, the Fibonacci retracement levels point to possible areas where sellers could be positioned. The 38.2% Fibonacci level is near 1.0798, close to the previous support zone, while the 50% level is at 1.0819. Additionally, the 61.8% Fibonacci retracement is around 1.0840.

Regarding the moving averages, the crossover of the 100-day SMA below the 200-day SMA ratifies a stronger downtrend, which points to a more likely bearish momentum gaining strength rather than reversing. If any of these Fibonacci levels hold, the EUR/USD could resume its decline towards the previous swing low. Moreover, the stochastic indicator has already reached the overbought zone, suggesting that buyers may be exhausted. A downward shift in the stochastic would indicate that sellers may be returning. Meanwhile, the Relative Strength Index (RSI) still has room to move higher before reaching the overbought zone, hinting that the correction could continue there.

Related articles