EUR/USD Approaches 1.0800: Key Market Insights and Fed’s Impact Explained

The EUR/USD has been trading near 1.0800 following Federal Reserve Chairman Jerome Powell’s testimony before Congress on Tuesday. Despite acknowledging improvements in inflation figures, the Fed maintained a cautious stance, disappointing market participants who were anticipating a more dovish tone.

As of the latest session, EUR/USD is trading at $1.08156, with the pivot point at $1.08186, which aligns with the 50-period Exponential Moving Average (EMA), acting as a crucial support level.

Focus on Upcoming US Inflation Data

Traders are closely monitoring the upcoming US Consumer Price Index (CPI) inflation data, scheduled for release on Thursday. This data is expected to be a significant driver of market movements in the latter half of the week.

Market forecasts suggest that annualized core CPI for June will remain steady at 3.4% year-over-year, while headline CPI is anticipated to increase to 0.1% month-over-month from the previous 0.0%.

Additionally, Initial Jobless Claims for the week ending July 5 are predicted to decrease slightly to 236,000 from the prior 238,000.

German Inflation Data and Technical Analysis

Early Thursday, traders will also focus on the German Harmonized Index of Consumer Prices (HICP) inflation figures. Year-over-year German inflation for June is expected to stay steady at 2.5%.

Technically, immediate resistance for the EUR/USD pair is identified at $1.08307, followed by $1.08332 and $1.08453. On the downside, immediate support is found at $1.08181, with subsequent levels at $1.07990 and $1.07993.

The Relative Strength Index (RSI) is at 46.96, indicating a slightly bearish sentiment. According to analyst John Smith, “A breach below the 50 EMA at $1.08186 could trigger further downside movement, making the support at $1.08181 crucial.

Conclusion and Trading Strategy

Traders should consider entering a sell position below $1.08177, with a take profit target at $1.07990 and a stop loss set at $1.08307. This strategy leverages the current market sentiment and technical indicators, providing a balanced risk-reward scenario.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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