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EURUSD Market Update

8/15/2022 3:28 PM

The EUR/USD pair has been correcting for more than four weeks against a long-term downtrend.

Last week, there was an increase in prices to the area of 1.0376, which was associated with investors' hopes for a slowdown in the rate hike by the US Federal Reserve to 50.0 percentage points after the decline in inflation in July from 9.1% to 8.5%, which by now, were leveled after the comments officials of the regulator and experts. They noted that inflation is still far from being defeated, and the recent slowdown in the indicator may be due to temporary factors, so in general, there are no reasons for a less sharp tightening of monetary policy in the US yet.

All this caused a pullback in the price of the EUR/USD pair from monthly highs, which was reinforced today by poor Chinese statistics: retail sales in China in July grew by only 2.7%, which is significantly lower than both the forecast of 5.0% and the June figure in 3.1%. The volume of industrial production increased by 3.8%, which is also not in line with market expectations (4.6%). These statistics indicate an insufficient recovery of the Chinese economy after lifting strict quarantine measures in Shanghai and an increase in the risks of a global economic downturn.

This week, the market expects two major events that can seriously affect the further movement of the asset: on Wednesday, data on the gross domestic product of the EU countries in the second quarter of this year and the minutes of the last meeting of the US Federal Reserve, which may contain hints of further actions of the regulator, will be published.

The trading instrument has reached the middle line of Bollinger bands around 1.0200, and if it consolidates below it, it will continue to decline to 1.0009 (Murrey [2/8]) and 0.9887 (Murrey [1/8]). The key "bullish" level is 1.0376 (Murrey [5/8]), the breakdown of which will give the prospect of further growth to 1.0500 (Murrey [6/8]), 1.0620 (Murrey [7/8]), 1.0742 (Murrey [8 /eight]).

Technical indicators do not give a single signal: Bollinger bands reverse horizontally, the MACD histogram stabilizes in the negative zone, and Stochastic points downwards.

Resistance levels: 1.0376, 1.0500, 1.0620, 1.0742. | Support levels: 1.0200, 1.0009, 0.9887.

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