EUR/USD Dips to Multi-Week Lows as US Dollar Rebounds

Economic

Traders' Opinions

Summary:

EUR/USD falls to multi-week lows below 1.0780 on Thursday, as the US Dollar recovers following a Federal Reserve meeting.

SELL EURUSD

Close Time

CLOSED

1.08000

Entry Price

1.07350

1.08500

1.13939 +0.00312 +0.27%

50.0

Pips

Loss

1.07350

1.08601

Exit Price

1.08000

Entry Price

1.08500

The EUR/USD currency pair faced significant bearish pressure on Thursday, trading at multi-week lows below 1.0780 as the US Dollar (USD) regained strength following a brief post-Federal Reserve dip. This decline marks the lowest level for the euro-dollar exchange rate since early July, highlighting the ongoing volatility in currency markets amid shifting investor sentiment.

On Wednesday, EUR/USD briefly edged higher during the late American session, buoyed by a temporary weakness in the USD after the Federal Reserve’s (Fed) monetary policy announcement. However, this upward movement was short-lived as the pair fell back into negative territory early Thursday. The Fed's decision to maintain the policy rate at 5.25%-5.5% was widely anticipated, and despite Fed Chairman Jerome Powell's comments about the potential for a rate cut in September, the USD's initial weakness was not sustained.

The Federal Reserve’s July meeting left key interest rates unchanged, aligning with market expectations. Powell’s remarks indicating that a rate cut is on the table for the September meeting provided a temporary boost to market sentiment. However, with a September rate cut already factored into market pricing, according to the CME FedWatch Tool, the USD's subsequent rebound was not surprising. As a result, the initial weakness in the USD failed to support EUR/USD in maintaining its gains.

The US economic calendar will feature several critical data releases that could further influence EUR/USD movements. The Department of Labor will publish its weekly Initial Jobless Claims data later today. Analysts forecast an increase in first-time applications for unemployment benefits to 236,000, up from the previous week’s 235,000. A lower-than-expected figure could bolster the USD and add further pressure on EUR/USD.

Additionally, the ISM Manufacturing PMI for July will be closely watched. A print above the 50 mark could lend support to the USD, reinforcing its recent gains. Conversely, a disappointing PMI result could alleviate some pressure on EUR/USD and help it recover from recent losses.

Technical Analysis

From a technical perspective, EUR/USD is exhibiting a clear bearish trend. The pair struggled to break through resistance at the descending trend line currently positioned around 1.0830. The Relative Strength Index (RSI) has extended its decline towards the 30 mark, indicating a build-up of bearish momentum. The recent price action, which saw EUR/USD break below the 1.0806 level, suggests that the bearish trend may persist.

The next key support level for EUR/USD is 1.0774, with further declines expected if this level is breached. Should the pair break below 1.0774, it could target the 1.0735 mark. A temporary correction might occur as the pair tests the broken support, but maintaining a position below 1.0800 is crucial for the continuation of the bearish trend.

For the trading day, EUR/USD is anticipated to range between support at 1.0750 and resistance at 1.0900. The overall trend remains bearish, with the focus on whether the pair can hold below the critical 1.0800 level to validate further declines.

TRADE RECOMMENDATION

SELL EURUSD

ENTRY PRICE: 1.0800

STOP LOSS : 1.0850

TAKE PROFIT: 1.0735

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Warren Takunda

Traders' Opinions

Economic

Summary:

The Australian Dollar (AUD) weakens against the US Dollar (USD) following the release of mixed economic data.

SELL AUDUSD

Close Time

CLOSED

0.65200

Entry Price

0.64100

0.65800

0.63755 -0.00146 -0.23%

110.0

Pips

Profit

0.64100

0.64099

Exit Price

0.65200

Entry Price

0.65800

The Australian Dollar (AUD) experienced a decline against the US Dollar (USD) on Thursday, pressured by a combination of mixed economic data and shifting expectations for future monetary policy. The Australian Bureau of Statistics (ABS) reported a trade surplus of AUD 5.589 billion for June, exceeding the anticipated AUD 5 billion but falling short of the previous month's surplus of AUD 5.773 billion. While this result indicated a stronger trade performance than expected, it was overshadowed by other economic developments impacting the Australian currency.

A critical factor in the AUD's recent weakness is the softer-than-expected inflation data and the evolving outlook for the Reserve Bank of Australia’s (RBA) monetary policy. The latest inflation report released on Wednesday revealed that the Monthly Consumer Price Index (CPI) rose by 3.8% year-on-year to June, easing from May's 4% increase. The quarterly CPI recorded a 1% rise quarter-on-quarter, aligning with expectations but still reflecting subdued inflationary pressures.

The RBA's preferred gauge, the Trimmed Mean CPI, climbed by 3.9% year-on-year in Q2, marginally below the anticipated 4.0%. These figures have tempered expectations for further rate hikes, with market forecasts now suggesting a roughly 50% chance of an RBA rate cut by November, significantly ahead of earlier projections for a move in April next year. Economists warn that additional interest rate hikes could jeopardize Australia's economic recovery, contributing to the bearish sentiment surrounding the AUD.

Compounding the pressure on the Australian Dollar is the disappointing manufacturing data from China, a key trading partner for Australia. The Caixin Manufacturing Purchasing Managers' Index (PMI) for July came in at 49.8, missing the forecast of 51.5 and falling below the previous reading of 51.8. This decline reflects ongoing challenges in China's manufacturing sector, which are likely to have ripple effects on the Australian economy given the close trade relationship between the two nations.

In contrast, the US Dollar has faced its own set of challenges, particularly after the Federal Reserve's decision to keep interest rates unchanged in the 5.25%-5.50% range during its July meeting. The US Dollar Index (DXY), which measures the greenback's performance against a basket of six major currencies, has edged lower to 104.20, retreating from recent highs. Traders are closely monitoring US economic data, including the ISM Manufacturing PMI and weekly Initial Jobless Claims, for further clues on the Federal Reserve's future policy moves.

In addition to the trade and inflation data, the Judo Bank Australia Manufacturing PMI edged up to 47.5 in July from 47.2 in June, indicating a continued contraction in manufacturing sector conditions, albeit at a slower pace. The National Australia Bank (NAB) anticipates that the RBA's cash rate will remain stable at 4.35% until May 2025, with a projected decline to 3.6% by December 2025 and further reductions expected in 2026.

Meanwhile, Australia's Building Permits data for June showed a 6.5% decline, exceeding the expected 3.0% drop and following a 5.7% increase in May. This trend suggests a cautious outlook for the housing sector. The Australian Prudential Regulation Authority (APRA) has noted rising arrears rates and plans to maintain current macroprudential policy settings, reflecting ongoing evaluations of both domestic and international economic conditions.

Technical Analysis

The AUD/USD pair is currently trading around 0.6540, showing a bearish bias as it consolidates within a descending channel. The 14-day Relative Strength Index (RSI) is approaching the oversold 30 level, hinting at a potential short-term upward correction. However, stochastic indicators are signaling overbought conditions, while the 50-day Exponential Moving Average (EMA) continues to exert negative pressure on the price.

In the near term, the Australian Dollar faces challenges as it tests the key support level of 0.6500. A break below this level could open the door for further declines towards 0.6410. Conversely, a breach of the 0.6570 resistance level would suggest a reversal of the current bearish trend and could lead to a price increase.

The expected trading range for today is between 0.6470 support and 0.6570 resistance. Given the current technical setup and economic backdrop, the AUD/USD pair is likely to remain under pressure, with the potential for further declines if key support levels are broken.

TRADE RECOMMENDATION

SELL AUDUSD

ENTRY PRICE: 0.6520

STOP LOSS: 0.6580

TAKE PROFIT: 0.6410

Risk Warnings and Disclaimers

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Winkelmann

Commodity

Summary:

Geopolitical tensions are heating up, and the Fed signaled that it may cut interest rates in September. Gold prices surged to $2450 as a result, but we still need to be careful of the risk of profit-taking.

SELL XAUUSD

Close Time

CLOSED

2490.00

Entry Price

2400.00

2525.00

3327.02 -15.88 -0.48%

350.0

Pips

Loss

2400.00

2525.00

Exit Price

2490.00

Entry Price

2525.00

Fundamentals

Gold surged overnight, with a total gain of 5% in July. After the assassination of the Hamas leader in Iran, the Iranian leader ordered a direct attack on Israel, which instantly escalated the Middle East tensions, increasing the safe-haven buying demand for gold. In addition, the Fed signaled a September rate cut, sending USDX lower, which boosted gold prices.

Relatively speaking, the Fed's monetary decision in July is in line with expectations, and the September rate cut has already been priced in by the market in advance. Investors should closely watch the market after the Fed's rate decision. In the short term, the geopolitical situation in the Middle East is still uncertain. It is not clear how much Iran and Lebanon Hezbollah will retaliate against Israel. The geopolitical risk may support gold prices, and even if there is a retracement, it will not retrace a lot. However, once the tension eases, gold will be affected as the risk-aversion sentiment will also ease. As gold approaches the psychological level of $2500, any external changes will result in a substantial movement. Therefore, investors still need to pay extra attention to the profit-taking situation.

Technical Analysis

Interest Rate Decision Made, Be Careful of Profit-Taking _1

In July, XAUUSD achieved the largest monthly growth since March, and the latest monthly candle covered the previous long-upper-shadow pattern, indicating further chances of rising.

Interest Rate Decision Made, Be Careful of Profit-Taking _2

Regarding the 4H chart, XAUUSD extended the bullish trend and once surged to $2450. Now, it retraced slightly, but the uptrend is intact as long as gold stays above the support levels of $2431 and $2420, and a new high could be reached. Nevertheless, with the emergence of overbought signals, gold may stop rising below $2500. According to previous top patterns, gold bulls may sell off, so we should stay alert when buying gold.

It is recommended to go short when gold surges to $2500. Investors should set the target at $2400, and put the stop-loss above $2520.

Trading Recommendations

Trading direction: Sell

Entry price: 2490

Target price: 2400

Stop loss: 2525

Support: 2400/2450

Resistance: 2500/2480

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Central Bank

Summary:

With the escalation of geopolitical tensions, gold has risen intraday and stabilized above US$2,420, although such spikes followed by pullbacks are quite common.

SELL XAUUSD

Close Time

CLOSED

2465.00

Entry Price

2329.00

2499.00

3327.02 -15.88 -0.48%

380.9

Pips

Profit

2329.00

2426.91

Exit Price

2465.00

Entry Price

2499.00