The EUR/USD pair took a hit on Thursday, falling to new lows close to 1.0780 as the US Dollar regained strength amidst increasing risk aversion in the market.
The Dollar surged to the 104.40 zone, fueled by a broad sell-off in risk-linked assets and concerns about a slowdown in the US economy. The Federal Reserve’s decision to keep interest rates unchanged and hints at a potential rate cut in September added to the Dollar’s momentum.
While both the Fed and the European Central Bank are expected to cut rates soon, weaker US economic data and signs of a slowdown in the Eurozone suggest a stronger Dollar and further declines in the EUR/USD pair.
Key economic indicators, such as the ISM Manufacturing PMI and Initial Jobless Claims, point towards a loss of momentum in the euro area. Technical analysis shows that the pair’s bearish trend is likely to continue as long as it remains below the crucial 200-day SMA at 1.0823.
In the short term, EUR/USD’s next support levels are at 1.0777, 1.0666, and 1.0649, while resistance levels are at 1.0948, 1.0981, and the psychological level of 1.1000.
EUR/USD Short-Term Technical Outlook
Currently, the pair shows signs of weakness with initial support at 1.0777 and 1.0709. Resistance levels are at 1.0806, 1.0842, and 1.0849. The RSI indicator is around 39, indicating a bearish momentum.
Analysis:
The USD’s strength and concerns about economic slowdowns have pushed the EUR/USD pair to new lows. With the Fed hinting at a potential rate cut and weaker US economic data, the Dollar is likely to remain strong against the Euro. Traders should watch for key support and resistance levels to gauge potential entry and exit points in the market.