Current trend

The EUR/USD pair is falling, trading at 1.0828 after the publication of macroeconomic statistics.

The July EU consumer price index remained at the same level in monthly change, leading to an increase from 2.5% to 2.6% YoY. It may become an obstacle to the next steps of the European Central Bank (ECB) officials to reduce interest rates. The core indicator, excluding food and fuel prices from calculations, did not change and amounted to 2.9%. Inflation in Italy increased from 0.8% to 1.3%, and in France from 2.2% to 2.3%. Thus, if the regulator continues to adjust the cost of borrowing, this may negatively affect consumer prices, preventing the economy from growing more actively.

The American dollar is correcting at 103.70 in USDX. US Fed officials maintained the parameters of the balance sheet reduction program and left the interest rate at 5.25–5.50%. The head of the regulator, Jerome Powell, noted there is a high probability of reducing the indicator in September, but the final decision had not yet been made. The key markers of the assessment are still the inflation and labor market targets. The official added that there are no plans to change the indicator by 50 basis points at once, and if the reduction takes place, it will be a standard step of 25 basis points.

Support and resistance

On the daily chart, the trading instrument is correcting, retreating from the resistance line of the ascending channel with dynamic boundaries of 1.0950–1.0700.

Technical indicators are slowing down the buy signal: fast EMA on the Alligator indicator are approaching the signal line, narrowing the range of fluctuations, and the AO histogram is forming downward bars, falling in the buy zone.

Resistance levels: 1.0850, 1.0940.

Support levels: 1.0800, 1.0710.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.0800, with the target at 1.0710. Stop loss is around 1.0850. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 1.0850, with the target around 1.0940. Stop loss is 1.0800.