Current trend

Amid the growth of the American dollar and poor EU macroeconomic statistics, the EUR/USD pair is falling within the corrective trend, trading at 1.0715.

In May, the German producer price index remained unchanged after growing by 0.2% MoM and slowed its decline from –3.3% to –2.2% YoY, remaining in the negative zone. Yesterday, the European Central Bank (ECB) published its monetary policy report, which indicated the reasons for the decision to cut interest rates at the meeting earlier in the month. The officials believe that it was correct both as a forward-looking measure and as a test of the system. Despite the acceleration of inflation in May, the regulator’s representatives are confident that they will be able to keep the cost of borrowing at a new level, putting pressure on consumer prices.

The American dollar rose to 105.10 in USDX. Initial jobless claims fell from 243.0K to 238.0K, leading to an increase in total claims from 1.813M to 1.828M, already considered in the quotes. In addition, building permits decreased from 1.440M to 1.386M, and construction volume from 1.352M to 1.277M. As a result of further cooling of the real estate sector, inflation, and the labor market, US Fed officials may begin to cut interest rates. Now, experts assume two adjustments to the indicator by 25 basis points by the end of 2024, the first of which may take place during the September meeting.

Support and resistance

On the daily chart, the trading instrument retreats from the resistance line of the downward channel with dynamic boundaries of 1.0880–1.0500.

Technical indicators strengthen the sell signal: fast EMA on the Alligator indicator move away from the signal line, expanding the range of fluctuations, and the AO histogram forms new bars, falling into the sell zone.

Resistance levels: 1.0741, 1.0840.

Support levels: 1.0685, 1.0600.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.0685, with the target at 1.0600. Stop loss is around 1.0730. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 1.0741, with the target around 1.0840. Stop loss – 1.0680.