The US Dollar (USD) saw losses on Wednesday, particularly against the Japanese yen, pushing the USD Index (DXY) close to the 104.00 level amidst varied developments in US yields.
EUR/USD dropped to new lows near 1.0820, approaching the critical 200-day SMA, but later rebounded to 1.0850 with slight gains in German 10-year bund yields.
Weaker Eurozone PMI data for July added pressure on the euro, while the Fed’s anticipated interest rate cuts and the US political scene influenced market sentiment.
Looking ahead, US GDP figures and PCE data will likely impact market sentiment in the coming days.
EUR/USD Short-Term Technical Outlook
Key support levels for EUR/USD include the 200-day SMA at 1.0816 and the June low of 1.0666, with a potential visit to the 2024 bottom of 1.0601 if the May low of 1.0649 is breached.
Resistance levels are at the July high of 1.0948, followed by the March top of 1.0981 and the critical 1.1000 milestone.
In the big picture, a positive bias is expected if the pair remains above the crucial 200-day SMA.
On the four-hour chart, initial resistance is at the 55-SMA at 1.0890, with support at 1.0825 and the 200-SMA at 1.0792.
Overall, the relative strength index (RSI) is around 36, indicating a potential for further movements in EUR/USD in the near term.
Analysis: The EUR/USD pair is currently facing downward pressure due to weak Eurozone data and anticipation of Fed rate cuts. Key support and resistance levels suggest potential trading opportunities for investors. Keeping an eye on upcoming US economic data could provide further insight into market sentiment and potential movements in the currency pair.