EUR/USD Analysis Summary Today

• Overall Trend: Still bearish.

• Support Levels for EUR/USD Today: 1.1375 – 1.1320 – 1.1250

  

• Resistance Levels for EUR/USD Today: 1.1470 – 1.1530 – 1.1580

EUR/USD Trading Signals:

• Buy scenario: From the support level of 1.1365 with a target of 1.1430 and a stop-loss at 1.1300

• Sell scenario: From the resistance level of 1.1530 with a target of 1.1400 and a stop-loss at 1.1600

Technical Analysis of EUR/USD Today

The EUR/USD currency pair is attempting to recover a portion of its losses at the start of July trading, after ending June with its steepest monthly bearish wave in several months. This comes amid persistent pressure stemming from slowing European inflation and as markets closely await comments from central bank officials. The sharp losses suffered last month dragged the pair down to the support level of 1.1324, its lowest level in over a year. At the time of writing, the Euro is stabilizing around $1.1425.

The technical outlook for the currency pair remains bearish. According to the performance on the daily chart, the Relative Strength Index (RSI) stabilizing below the 50 level reflects continued seller dominance. Meanwhile, the negative slope of the MACD indicator indicates weakening buying momentum and the likelihood of sustained selling pressure. The movement of the Simple Moving Averages (SMAs) warns of further downward movement as long as the currency pair remains below the 1.1400 level.

Conversely, an upside scenario on the daily chart would require the EUR/USD pair to head toward breaking the resistance barrier at 1.1580, and then 1.1700 respectively.

Today, the currency pair will be influenced by market and investor reactions to statements from central bank officials, particularly the heads of the European Central Bank (ECB) and the Federal Reserve, during an event hosted by the ECB that gathers a number of global central bank policymakers.

Falling Inflation Weighs on the Euro

Across top trading platforms, the Euro faces mounting pressure following the release of French and German inflation data that came in lower than market expectations. This has reinforced expectations that the European Central Bank’s need to continue raising interest rates in the coming period is diminishing.

Data showed that inflation in Germany fell by 0.3% on a monthly basis, while the annual rate slowed to 2.3% against expectations of 2.6%. In France, the Consumer Price Index (CPI) dropped 0.3% during June, bringing the annual inflation rate down to 1.8% compared to a forecast of 2.1%.

Analysts believe that the ongoing slowdown in inflation could prompt markets to pare back bets on any additional interest rate hikes, which may cap the Euro’s gains against major currencies. Andreas Steno Larsen of Real Vision noted that the recent data strengthens the likelihood of the ECB shifting its approach in the coming period.

Despite this, ECB officials maintain a cautious stance. ECB President Christine Lagarde emphasized that monetary policy decisions will remain data-dependent, while Bundesbank President Joachim Nagel warned that energy price pressures could keep inflation above the target level for some time.

For its part, ING Bank expects a temporary spike in inflation during the second half of the year due to base effects in energy prices, before it returns to levels below 2% over the medium term. The bank stressed that current conditions differ from the severe inflationary wave witnessed globally in 2022, noting the absence of indicators pointing to a new inflationary spiral.

Consequently, the Euro may receive limited support in the short term due to the ECB’s continued cautious tone. However, the persistent slowdown in inflation could drive markets to lower interest rate hike expectations, potentially keeping the single currency under pressure in the coming months.

Trading Advice:

The Euro may remain under selling pressure until the market reacts to upcoming high-impact data releases. Regardless of your bullish or bearish convictions, strict risk management is absolutely essential.

Ready to trade our EUR/USD analysis and predictions? Here are the best European brokers to choose from.

Mahmoud Abdullah is a financial markets analyst who has been covering global market movements for several years, with a particular focus on forex trading, commodities, indices, and macroeconomic price action analysis. He has been analyzing global financial markets since 2006 and currently serves as the Chief Analyst and Editor-in-Chief of the well-known website Traders Up. Mahmoud Abdullah combines technical analysis with macroeconomic context to understand market trends, paying close attention to price behavior, momentum, support and resistance levels, risk management, and evaluating high-probability market opportunities.

As seen on: mahmoud.a@dailyforex.com