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EUR/USD Rate Talking Points
EUR/USD threatens the August opening range, trades to a fresh weekly low (1.0122), and the pair is likely to follow the negative slope of the 50-day SMA (1.0294) as it continues to hold the former support of the decline near the May low area (1.0349).
EUR/USD to Track 50-Day SMA After Testing Former Support Zone
The recent price action adds room for further losses in EUR/USD as it extends last week’s series of lows and lows and the pair may struggle to sustain its recovery from the yearly low (0.9952) as the former support area of the May low The point (1.0349) is now resistance.
Looking ahead, it remains to be seen whether the FOMC minutes will affect EUR/USD, as Chairman Jerome Powell conceded, “A slower pace of gains may be possible as we assess our cumulative policy adjustments. Appropriate. If more officials show a greater willingness to raise interest rates slightly in the coming months, signs of an imminent shift in Fed policy could create headwinds for the dollar.
As a result, EUR/USD could face range-bound action ahead of the next FOMC rate decision on Sept. 21 as expectations for another 75bps rate hike by the Fed fade, but the Committee is likely to keep its current inflation-fighting approach as chair Powell firmly “At our next meeting, another unusually large increase may be scheduled.”
In turn, the rebound from the yearly low (0.9952) could prove to be a correction to the broader trend, as the FOMC is enacting a dovish policy and the recent reversal in retail sentiment appears to be short-lived, with traders spending most of 2022 , EUR/USD is net long.
The IG Client Sentiment report shows that 63.46% of traders are currently net long EUR/USD, with a ratio of 1.74 to 1 traders.
The number of net long positions increased by 1.61% from yesterday and 16.42% from last week, while the number of net shorts decreased by 1.82% from yesterday and 19.31% from last week. A rise in net-long interest rates drove a reversal in retail sentiment as 49.15% of traders were net long EUR/USD last week, while net short positions fell as the exchange rate weakened the threat of the August opening range.
Against this backdrop, EUR/USD is likely to continue to track the negative slope of the 50-day SMA (1.0294) after reacting to the former support area near the May low (1.0349) and the pair may struggle, preventing growth from 2019 Low (0.9952) as it extends last week’s low and low.
EUR/USD Rate Daily Chart
- EUR/USD is threatening the August opening range as the former support area near the May low (1.0349) is now acting as resistance and the pair is likely to largely mirror June price action as it struggles to stay above 50 To hold the daily moving average (1.0294).
- In turn, after a failed attempt to break/close the 1.0370 (38.2% extension) area, EUR/USD could continue to track the negative slope of the moving averages below 1.0220 (161, 8% extension) and 1.0070 (161.8% extension on the radar) )area.
- The next area of interest is around 0.9910 (78.6% retracement) to 0.9950 (50% expansion) and below the yearly low (0.9952) and opening the December 2002 low (0.9859).
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