{x} | Trading.live

Abstract: The moderate U.S. CPI data did not trigger the continuous cyclical decline of the USD, and the EUR bears will still be controlled below 1.0980.

Fundamentals

So far in August, the EURUSD has been unable to stay above the 1.1000 level. In the face of another positive CPI report, the yield of U.S. Treasury Securities yields shows elasticity, which indicates that the USD will continue to be supported in the short term. The yields will be more affected, which will cause the EURUSD to fall. However, the view that the USD will strengthen is a short-term view, reflecting the possibility of a quiet trading situation in the coming weeks.

But in the short term, strong U.S. retail data may boost the USD and further drag down the EURUSD. The EURUSD fell below 1.0900 on Monday, the lowest level in more than five weeks, and has been on a downward track for the past month. The last two fairly mild CPI data in the U.S. did not trigger a continuous cyclical decline in the USD. At the same time, the growth prospects of the eurozone seem to be deteriorating, and it is expected that this model will continue to put pressure on the EURUSD.

The market will also pay attention to the future actions of the Federal Reserve. Last weekend, major American investment institutions made predictions on the interest rate outlook. It is expected that the Fed will start to cut interest rates in June 2024, and then cut interest rates quarterly. This means that inflation is expected to reach the 2% target by then. This is a strange position, but it is consistent with the actual situation.

Looking forward to the future, the market will also welcome the Fed to announce the latest meeting minutes to find new impetus. As usual, investors will look for reasons and hints for the Fed's interest rate decision in September.

In the 4H timeframe, the EURUSD started a new round of decline from last week's level of 1.1064. Today, the market reaches 1.0940. At present, the consolidation range is forming near this level. It is expected that the price will break down to 1.0880; Next, it could fall to 1.0820, which is the first goal. Technically, the signal line of MACD is below zero, which can confirm this situation. It is expected that this indicator will continue to fall to a new low.

If the price stops falling and stabilizes at the current level, the price may start to be adjusted to 1.0966, followed by the integer threshold of 1.1000. Technically, this is confirmed by the stochastic oscillator, whose signal line has broken upwards through the threshold of 20 and continues to rise to 50. The line is expected to bounce off this threshold.

Technical Analysis

On Tuesday, the EURUSD bears faced some resistance but remained in control after a weekly close below the 50% Fibonacci retracement of the 1.0635 - 1.1275 uptrend at 1.0955 sent a bearish signal.

However, the recent move to hold the 100-day SMA at 1.0930 again suggests that bears may pause here, allowing the EURUSD to continue the consolidation pattern it has been in for the past two weeks.

It still lacks clear directional signals in the 1D timeframe regarding conflicting indicators as the momentum is bearish, the SMAs are in a mixed structure and the falling stochastic is approaching the oversold zone.

A sustained break below 1.0955 would be needed to maintain downside pressure, but a clear break below the 100-day SMA would be needed to signal continued bearishness to attack key support at 1.0880.

On the other hand, a close above 1.0988 in the 1D timeframe would mark the beginning of a turn in the bulls' favor and a further move towards the integer threshold of 1.1000, a break above this resistance level would reinvigorate the bulls.

Overall, despite mixed signals from momentum indicators, the USD still has some upside and is dominating, giving hope to EUR bears. It is recommended to go short at the highs.

Trading Recommendations

Trading direction: Short

Entry price: 1.0930

Target price: 1.0776

Stop loss: 1.1000

Deadline: 2023-08-29 23:55:00

Support: 1.0930, 1.0912, 1.0880, 1.0833

Resistance: 1.0988, 1.1005, 1.1031, 1.1052