EUR/USD has been trading in a tight channel below 1.1100 on Tuesday, with the potential for a correction lower if the key support at 1.1060 fails to hold. The USD’s valuation is likely to be influenced by risk perception, as high-tier data releases are absent.
Economic Outlook
EUR/USD showed strength at the beginning of the week, gaining 0.5% for the second consecutive trading day. However, after reaching a high near 1.1090 on Tuesday, the pair pulled back slightly and is currently trading below 1.1080.
Technical Analysis
The Relative Strength Index suggests a potential technical correction, with key support levels at 1.1060, 1.1030, and 1.1000. On the upside, resistance levels are at 1.1100 and 1.1140.
Market Factors
The upbeat risk mood has weakened the USD against major rivals, allowing EUR/USD to continue its upward trajectory. Dovish comments from Federal Reserve Bank of Minneapolis President Neel Kashkari have also weighed on the USD.
Eurostat confirmed that the Harmonized Index of Consumer Prices rose 2.6% on a yearly basis in July, in line with market expectations.
Impact on Investors
With no high-impact data releases scheduled for Tuesday, investors will likely focus on changes in risk perception. A continuation of the risk rally could further weaken the USD and push EUR/USD higher.
Conclusion
EUR/USD’s trading dynamics are influenced by risk sentiment and key support levels. Investors should monitor the pair’s movement closely for potential trading opportunities and be prepared for volatility in the forex market.