EUR/USD showed resilience as it climbed to two-day peaks around 1.0870 after testing the critical 200-day SMA at 1.0818. The Dollar traded with uncertainty amid fluctuating yields and positive US flash Q2 GDP data.
The US Dollar struggled for direction, leading to the USD Index (DXY) hovering around 104.30. Meanwhile, the Euro shrugged off negative German Business Climate data and weak PMIs in the region.
Market focus now shifts to the upcoming Fed interest rate cut in September and the US political landscape, with Vice President K. Harris gaining support against Republican candidate D. Trump for the November elections.
The ECB also hints at a future interest rate cut, maintaining policy divergence between the Fed and ECB. This divergence, coupled with a softening Eurozone economy, may lead to further weakness in EUR/USD.
Key US PCE data release on Friday could increase market volatility and reinforce the case for lower rates in September.
EUR/USD Short-Term Technical Outlook
Support levels for EUR/USD include the 200-day SMA at 1.0818 and the June low at 1.0666. Resistance levels are at the July high of 1.0948 and the key threshold of 1.1000.
Overall, a positive bias remains as long as the pair stays above the critical 200-day SMA. The four-hour chart indicates potential support, with resistance levels at 1.0886, 1.0948, and 1.1000, and support levels at 1.0825, 1.0794, and 1.0709.
Analysis: EUR/USD shows resilience amidst mixed economic data and market uncertainty. Future interest rate cuts and political developments could impact the pair’s direction. Traders should watch key support and resistance levels for potential trading opportunities.