EUR/USD Declines Towards 1.0800 – Capital Street FX
17 May 2023
As the US Dollar strengthens, the EUR/USD continues to decline towards 1.0800.
In European trade, the EUR/USD is holding its lower level and is getting close to 1.0800. A stronger US Dollar and the lackluster risk sentiment surrounding the changes to the US debt ceiling hurt the pair. Now, everyone is focused on the US numbers and ECB-speak.
Early on Wednesday, the EUR/USD lost momentum and dropped to its lowest point in more than a month below 1.0850. Although the technical analysis of the pair indicates oversold circumstances, sellers may attempt to keep control unless there is a discernible improvement in risk sentiment.
Following the most recent round of debt ceiling negotiations on Tuesday, investors have started to become more confident about the US averting a default, but markets are still risk-averse by midweek. Early in the morning in Europe, the Euro Stoxx 50 Index is down about 0.3%, while Dow Futures are down 0.75%.
Leading congressional Republican Kevin McCarthy told reporters after his meeting with US President Joe Biden and other top congressional leaders on Tuesday that an agreement on extending the debt ceiling might be reached by the end of the week.
Investors will still closely monitor risk perception and central bank officials’ remarks, though. The USD should be able to maintain its strength against its competitors and put pressure on the pair even if Wall Street’s major indexes decline after the opening bell.
EUR/USD TECHNICAL ANALYSIS DAILY CHART:
EUR/USD is currently trading in the down channel.
EUR/USD is currently trading below all SMA.
RSI is in the selling zone which suggests bearishness and Stochastic is suggesting a downtrend.
EUR/USD resistance is at 1.08604 & its immediate support level is 1.08357
HOW TO TRADE EUR/USD
After making an intense upward movement, the EUR/USD trend quickly reversed and it began to move downward. Price is currently trading near a crucial support level; if this level is breached, further declines may be possible.