EUR/USD Breaks Key Support Level as Dollar Gains Momentum
The EUR/USD pair dipped below the critical 1.1100 support level, hitting multi-day lows amid a strong rebound in the US Dollar. The Dollar gained ground against the Japanese yen and saw positive data releases, including better-than-expected Q2 GDP figures and weekly Claims.
Investors are closely monitoring the possibility of a rate cut by the Federal Reserve in September, with Fed Chair Jerome Powell hinting at potential policy adjustments. Meanwhile, the European Central Bank (ECB) is also considering interest rate reductions to counter the impact of high rates on economic growth.
Lower-than-expected inflation data in Germany and the Eurozone could influence future rate decisions by central banks. If the Fed implements further rate cuts, it could narrow the policy gap between the Fed and ECB, potentially boosting the EUR/USD pair in the long term.
Technical analysis suggests that the EUR/USD pair could test resistance levels at 1.1201 and 1.1275, while support levels are at 1.1055 and 1.1046. The overall trend remains bullish as long as the pair stays above the key 200-day SMA.
Overall, developments in central bank policies and economic data releases could impact the EUR/USD pair, with potential for both upward and downward movements based on market conditions.