Eurozone Sentiment Hits New High! EUR/USD Poised to Drop

Tank

Summary:

SELL EURUSD

EXP

TRADING

1.15828

Entry Price

1.12000

1.17500

1.15830 +0.00088 +0.08%

0.0

Pips

Flat

1.12000

Exit Price

1.15828

Entry Price

1.17500

Fundamentals

Data released on the 18th by the German Center for European Economic Research (ZEW) showed that Germany’s economic sentiment index continued to rise in August, increasing by 7.9 points from July to 34.2 points; the index measuring current economic conditions also improved significantly, rising by 16.5 points from July to minus 61.1 points. Achim Wambach, President of the ZEW, stated that the positive trend in Germany’s economic expectations for August likely stems from strong quarterly corporate earnings and recent robust export performance. The German economy continues to benefit from the federal government’s infrastructure investment plan, but record-low water levels in the Rhine River pose new risks to economic growth in the short term.

According to a report by a British maritime trade operations agency, a merchant ship was struck by an unidentified projectile while transiting the Strait of Hormuz. This incident rapidly intensified market concerns over a further escalation of the U.S.-Iran conflict. The day before, U.S. President Trump had made it clear that he had no intention of extending the soon-to-expire agreement with Iran, while Iranian Foreign Ministry Spokesperson Baghai emphasized that reaching an agreement was difficult due to the complex security situation and called on the U.S. to lift its sanctions. The Strait of Hormuz is the world’s most critical chokepoint for oil transportation. The attack on the vessel caused the geopolitical risk premium to surge rapidly; safe-haven demand drove the U.S. dollar higher, putting downward pressure on the euro against the dollar.

Technical Analysis

On the daily chart, the Bollinger Bands for the EUR/USD pair are widening upward, and the moving averages are diverging upward, indicating that the overall uptrend remains intact. The MACD fast and slow lines continue to trade above the 0-axis, and the RSI stands at 63, indicating that the market is in an optimistic mood. On the four-hour chart, the Bollinger Bands have begun to narrow, moving averages have flattened, and prices are consolidating near the 200-period moving average (MA200). The upward momentum of the MACD is waning, with a bearish divergence signal emerging, suggesting a high probability of a decline. The RSI stands at 58, indicating that market sentiment remains predominantly optimistic. Strategically, look to sell on rallies.

Eurozone Sentiment Hits New High! EUR/USD Poised to Drop_1

Trading Recommendation

Trading Direction: Short

Entry Price: 1.158

Target Price: 1.12

Stop-Loss Price: 1.175

Support Levels: 1.14, 1.13, 1.12

Resistance Levels: 1.17, 1.2, 1.21

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Eurozone Sentiment Hits New High! EUR/USD Poised to Drop

Risk Disclosure