Today, the EUR/USD pair has corrected downwards, having lost a number of previously won positions, and is now testing the 1.0498 mark (Murray [2/8]).
The European currency was under pressure from weak June business activity data. In the manufacturing sector, the index decreased from 54.6 to 52.0 points, and in the service sector – from 56.1 to 52.8 points; in Germany, the indicator adjusted from 54.8 to 52.0 points and from 55.0 to 52.4 points, respectively. The negative dynamics confirms the slowdown in the eurozone economy, which is caused by a decrease in consumer demand. Experts believe that households have already exhausted the need for purchases accumulated during the coronavirus pandemic and have switched to saving due to a serious increase in inflation. Further spending cuts will only increase the risks of recession in the European economy.
Against this background, the USD looks more attractive for investment, although its positions are not stable. The head of the US Fed Jerome Powell addressed the National Congress and confirmed the need for further tightening of monetary policy, since the inflation rate in the country remains too high. Powell also admitted the possibility of a recession, which, according to the official, will be difficult to avoid due to the consequences of the Ukrainian crisis, rising prices for raw materials and disruptions in supply chains.
Support and resistance
Technically, the price of the EUR/USD pair is testing the 1.0498 mark (Murray [2/8]), consolidating below which will give the prospect of further decline to 1.0376 (Murray [1/8], lower line of the Bollinger Bands), 1.0253 (Murray [0/8]). The key for the "bulls" is the level of 1.0620 (Murray [3/8], middle line of the Bollinger Bands, Fibo retracement of 23.6%). If the price consolidates above it, the growth targets will be 1.0790 (Fibo retracement of 38.2%) and 1.0864 (Murray [5/8]).
Technical indicators do not give a single signal: the Bollinger Bands are reversing downwards, but the Stochastic is directed upwards, and the MACD histogram is stable in the negative zone.
Resistance levels: 1.0620, 1.0790, 1.0864.
Support levels: 1.0498, 1.0376, 1.0253.