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01/10/24
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EUR/USD Faces Resistance as Euro Weakens Amid Cautious Market Sentiment
The EUR/USD currency pair experienced a decline, retreating below the 1.1150 level after encountering resistance at the 1.1200 level. This inability to surpass the key resistance point suggests a diminishing bullish momentum in the near term. As the pair navigated through a narrow channel early Tuesday, the technical analysis indicated a lack of buyer interest, signaling a cautious attitude among traders.
Recent market dynamics demonstrated that the Euro was the weakest performer among major currencies, particularly against the Australian Dollar. In the absence of significant macroeconomic data, the US Dollar maintained its strength amidst a prevailing cautious market sentiment. This resilience was further bolstered by remarks from the Federal Reserve Chairman, who indicated that the central bank is not rushing to implement rate cuts. Monetary policy decisions will continue to be informed by prevailing economic data.
Investors are awaiting the upcoming release of the Harmonized Index of Consumer Prices (HICP) data from Eurostat, anticipated later in the session. Predictions suggest annual increases of 1.9% for the HICP and 2.8% for the core HICP. The European Central Bank President signaled confidence that inflation trends are reassuring, emphasizing that these developments will influence decisions in the forthcoming monetary policy meeting in October. Should core inflation data come in lower than expected, the Euro could face downward pressure against its counterparts.
Later in the day, US economic indicators will be released, including the ISM Manufacturing PMI and JOLTS Job Openings statistics. A significant drop in job openings, trending towards 7 million, could negatively impact the Dollar. Conversely, any surprising uptick in the ISM Manufacturing PMI, particularly with a figure exceeding 50, may provide support for the US currency.
Technical indicators, such as the Relative Strength Index (RSI) on the 4-hour chart, reflect a bearish trend, slipping below the neutral level of 50. On the downside, a robust support zone appears to have formed between 1.1110 and 1.1100, while critical levels await at 1.1040 and 1.1000. Should the pair move upward, immediate resistance is found at 1.1160, with further obstacles at 1.1200 and 1.1275.
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