Bearish Correction Could Accelerate Following Rejection at Key Resistance

Forex

Economic

Summary:

Price has logged a solid close below the 100-period moving average located at 1.1543 following a downside rejection off the 1.1557 resistance zone.

SELL EURUSD

EXP

TRADING

1.15352

Entry Price

1.14670

1.15800

1.15394 -0.00023 -0.02%

0.0

Pips

Flat

1.14670

Exit Price

1.15352

Entry Price

1.15800

Talks between Washington and Tehran continue to encounter significant obstacles in reaching an agreement to fully reopen the Strait of Hormuz, a strategic shipping lane for global energy trade. Mutual demands for compensation over conflict-related damages have dampened expectations for a swift resolution, leaving maritime transit through the strait severely restricted.

Prospects for de-escalation deteriorated further after Iran dismissed the possibility of resuming negotiations with U.S. President Donald Trump. According to several reports citing Iranian media, Tehran appears willing to wait out the remainder of the current U.S. presidential term ending in January 2029 before considering renewed dialogue with Washington.

In the United States, financial markets also reacted to hawkish remarks from Cleveland Federal Reserve President Beth Hammack. The official noted that current monetary policy is not harming the economy, adding that more than one additional rate hike will likely be required to sustainably return inflation toward the central bank's target.

These comments arrive at a time when investors remain divided regarding the Federal Reserve's upcoming policy decision. Focus now shifts to the publication of July's Consumer Price Index (CPI), which could provide fresh cues on the future trajectory of interest rates.

Market consensus expects headline inflation to cool to 3.4% year-over-year in July from 3.5% in June, while core inflation is projected at 2.5% year-over-year compared to 2.6% prior. A higher-than-expected reading could reinforce expectations for a tighter monetary stance and support the U.S. dollar, whereas softer figures might unleash fresh downward pressure on the currency.

Recent labor market metrics from the U.S. continue to signal a gradual slowdown. Initial jobless claims dropped to 199,000, slightly outperforming expectations, while Challenger job cuts fell to 33,400 from 45,800 reported previously. Taken together, these indicators suggest that employment moderation stems primarily from reduced hiring rather than a noticeable rise in layoffs.

Across the Eurozone, service sector activity readings pointed to mixed outcomes in July. In Spain, the HCOB Services PMI delivered an upside surprise by reaching 58.3 points, comfortably beating both the preliminary estimate and the previous print to reflect solid business expansion. In Germany, the Services PMI saw a modest upward revision to 49.8 points, though it remained below the 50 threshold separating growth from contraction. Meanwhile, the German Composite PMI ticked up to 51.3 points, while the Eurozone composite index moved up to 52.0, pointing to a progressive recovery in private activity led mainly by peripheral economies.

On the inflation front, price pressures demonstrated ongoing persistence. Headline Eurozone inflation picked up to 2.9% year-over-year in July from 2.8% prior, while core inflation made an unexpected bounce to 2.5%. These prints back expectations that the European Central Bank (ECB) will keep a tight policy stance in place over coming months. Bearish Correction Could Accelerate Following Rejection at Key Resistance_1

Bearish Correction Could Accelerate Following Rejection at Key Resistance_1

Technical Analysis

EURUSD appears to have launched a corrective move after touching a local high of 1.1581. At present, price has logged a solid close below the 100-period moving average located at 1.1543 following a downside rejection off the 1.1557 resistance zone. Should price close below the 200-period moving average sitting at 1.1531, the downward push could accelerate toward 1.1467—an area housing local support aligned with the 0.50 Fibonacci retracement level, lending extra weight to this downside target.

Looking at the oscillators, the RSI touched the 79 mark at its local peak before reacting lower; it currently sits at 41, slightly inside bearish territory with room to keep building downward momentum. Meanwhile, the MACD shows a bullish histogram with virtually no depth and a high potential for an impending bearish crossover, while the signal lines hover around the neutral mark, indicating that the path of least resistance remains to the downside.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1534

Target price: 1.1467

Stop loss: 1.1580

Validity: Aug 21, 2026 15:00:00

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Bearish Correction Could Accelerate Following Rejection at Key Resistance

Technical Analysis

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