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The Euro is Falling Under the Pressure of Poor Statistics

9/7/2022 2:59 PM

Quotes of the EUR/USD pair show an active downward trend ahead of the US Federal Reserve meeting scheduled for September 21.

Investors are highly likely to expect a rate hike of 75.0 basis points. The tighter monetary stimulus will put unprecedented pressure on households and industry, and is likely to slow economic growth, leading to higher unemployment, said Jerome Powell, the head of the department, but he considers these consequences inevitable in the context of the targeted inflation containment. Regulatory speakers signal that the agency will stick to a hawkish policy until consumer prices decline steadily, implying an interest rate hike to 4.00% by the end of 2022/beginning of 2023.

The euro position is also negatively affected by macroeconomic statistics: Composite PMI from S&P Global for August was at 48.9 points, which is worse than expected at 49.2 points, and the indicator in the service sector was 49.8 points, yielding to the forecast of 50.2 points. The retail sales volume for July added only 0.3% MoM, although analysts expected a value of 0.4%. Today, data on the EU's gross domestic product (GDP) is expected: the Q2 figure may reach 3.9% YoY and 0.6% QoQ. Any deviation of the actual value down from the forecast will cause a new wave of sales of the European currency, but if the GDP turns out to be higher than expected, then the EUR/USD pair may correct to 1.0000 and then continue to fall again.

The long-term trend is downwards. Market participants broke through 0.9950 and consolidated below it, and the next target for the fall is 0.9800, and it is worth opening short positions during the correction from 1.0000.

The medium-term trend is downwards, and the "bears" have broken through the target zone 2 (0.9944–0.9923) this week and are trying to keep the price below. If the trading week closes below this range, the next target will be zone 3 (0.9732–0.9711), and the trend's key resistance will move to 1.0096–1.0075.

Resistance levels: 1.0000, 1.0300. | Support levels: 0.9800, 0.9620.

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