Another very ambitious week saw the EUR/USD pair trade with generous gains and extend its positive streak for the third week in a row, approaching the 1.0900 level.
Last week was dominated by Fed Chairman Jerome Powell’s speech to Congress and the Senate, and US data gained importance for market traders.
With the semi-annual testimony, the Fed Chairman reiterated that the Committee needs to see more progress on inflation and get inflation on track to the 2% target before considering a rate cut, but gave no indication of when to start cutting rates.
It is also worth mentioning that the Fed is in no hurry to start lowering rates, although investors are increasingly confident that the rate cut will come in September. Inflation appears to be cooling again after stagnating during the first months of the year, while the labour market is also showing signs of cooling. Additionally, consumer spending is slowing, and this week’s retail sales figures due on Tuesday may provide strong evidence of this.
Both Monday and Thursday of this week will bring manufacturing data from New York and Philadelphia. Wednesday will bring building permits and industrial production data.
The week looks to be a very choppy one for the US dollar so there is potential for short term gains. It should not be overlooked that any data release is always going to affect the EUR/USD both positively and negatively.
In the Eurozone last week, there was considerable silence from the European Central Bank. The only one to speak out was the head of the Dutch central bank, Klaas Knot, who indicated that there is no compelling reason for the bank to cut this month, although the scheduled September meeting may be open to further market flexibility.
The EUR is likely to remain stable as there is no major data impact in Europe this week on the economic calendar.
EUR/USD daily technical analysis for July 15th:
By breaking above the key 200-day SMA, the EUR/USD has cleared the way for a possible continuation of the uptrend in the near future. The immediate barrier lies at the July high of 1.0900, followed by the June high of 1.0916 and the March high of 1.098. A break above the latter could see the pair encounter the psychological barrier of 1.1000.
Conversely, if sellers regain the upper hand, the spot rate should find decent support at the 200-day SMA at 1.0803. A fall in this area would expose further fragility and likely move towards the June low at 1.0666, ahead of the May low at 1.0649 and the 2024 low at 1.0601.
