EUR/USD Remains Bearish Below 1.0950 Ahead of US Data Release

Fundamental Overview

EUR/USD is currently trading defensively below 1.0950 and remains close to multi-week lows. The US Dollar is enjoying strong support from robust US jobs data and a risk-off sentiment in the market. Meanwhile, the Euro is facing downward pressure due to weaker Eurozone PPI inflation data. Investors are now closely monitoring the upcoming US ISM data to gauge its impact on the currency pair.

During the first three days of the week, EUR/USD experienced a decline and hit its lowest point since July 7 at 1.0913. The pair is technically bearish, and in the current risk-averse market environment, the Euro may struggle to hold its ground against the US Dollar (USD) in the near future.

The recent surge in the US dollar’s strength can be attributed to private sector employment data for July, which exceeded market expectations. With Wall Street’s key market indexes witnessing a significant decline, the USD received further support and pushed EUR/USD lower.

As of now, the Euro Stoxx 50 Index has dropped over 1%, and futures on US stock indexes indicate a 0.4% to 0.6% decline, signaling the prevalence of safe-haven movements in the market. If US stocks continue to decline, the EUR/USD might face additional pressure during the American trading session.

Market participants are closely watching the weekly Initial Jobless Claims (IJC) and July ISM Services PMI figures. A lower-than-anticipated Jobless Claims print and an Employment component ISM PMI rating above 50 could provide an additional boost to the USD ahead of Friday’s jobs data release.

EUR/USD Technical Analysis – Daily Chart

Technical Overview:

• EUR/USD is currently trading within a down channel.
• The currency pair is positioned below all Simple Moving Averages (SMA).
• The Relative Strength Index (RSI) is in the selling zone, while the Stochastic oscillator indicates a downward trend.
• Immediate Resistance level: 1.0941
• Immediate support level: 1.0913

How to Trade EUR/USD

After experiencing a sharp rise, the EUR/USD has reversed its course and is now trading downwards, forming a lower low-like structure. The currency pair is currently hovering around a crucial support level, and if this level breaks down, further decline can be expected.

The technical indicators, including the RSI and Stochastic oscillator, are pointing toward a sell signal for EUR/USD.

Trade Suggestion

For traders looking to enter the market, a sell entry at 1.0889 is advisable, with a take-profit target set at 1.0832 and a stop-loss at 1.0936.

Conclusion

EUR/USD continues to remain bearish below 1.0950, with the US Dollar being supported by strong economic data and risk-off market sentiment. On the other hand, the Euro is weighed down by weaker inflation data from the Eurozone. As market participants await US ISM data and weekly jobless claims figures, the currency pair’s future trajectory remains uncertain. Traders should exercise caution and closely monitor technical indicators before making any trading decisions.

Frequently Asked Questions (FAQs)

1. What is the current position of EUR/USD?

• Answer: EUR/USD is trading defensively below 1.0950 and near multi-week lows.

2. What factors are impacting EUR/USD’s movement?

• Answer: The currency pair’s movement is influenced by US economic data, market sentiment, and safe-haven movements.

3. What is supporting the US Dollar?

• Answer: The US Dollar is supported by strong US jobs data and a risk-off mindset in the market.

4. What is weighing down the Euro?

• Answer: The Euro is facing downward pressure due to weaker Eurozone PPI inflation data.

5. What upcoming data is being closely watched by investors?

• Answer: Investors are closely monitoring the upcoming US ISM data and weekly Initial Jobless Claims (IJC) figures.

6. How is EUR/USD positioned on the technical chart?

• Answer: EUR/USD is currently trading within a down channel and is positioned below all Simple Moving Averages (SMA).

7. What are the resistance and support levels for EUR/USD?

• Answer: Immediate Resistance: 1.0941, Immediate Support: 1.0913.