EUR/USD Weakens Below 1.0750 Amid Eurozone Political Uncertainty

Forex

Economic

Summary:

EUR/USD slips below 1.0750 amid Eurozone political uncertainty and Fed's cautious stance. Snap elections in France and ECB's potential easing weigh on the Euro. The Fed's hawkish tone limits the dollar's downside, with key PMI data awaited.

SELL EURUSD

Close Time

CLOSED

1.07200

Entry Price

1.06000

1.07800

1.16370 +0.00006 +0.01%

23.9

Pips

Profit

1.06000

1.06961

Exit Price

1.07200

Entry Price

1.07800

The EUR/USD pair has lost traction, trading around 1.0730 in the early European session on Thursday. This drop ends a three-day winning streak as political uncertainty in the Eurozone weighs heavily on the shared currency. Market participants remain cautious, anticipating the preliminary Purchasing Managers Index (PMI) data from both the Eurozone and the US, set for release on Friday.

Political turbulence in the Eurozone, particularly in France, has added to investor anxiety. The call for a snap election following a defeat by the far-right National Rally has intensified fears regarding the region's political stability. This uncertainty continues to undermine confidence in the Euro.

In parallel, the European Central Bank (ECB) has signaled the possibility of further monetary easing. On Wednesday, ECB Governing Council member Mario Centeno suggested that the central bank could ease policies further if inflation remains subdued. This dovish stance contrasts sharply with the US Federal Reserve’s current position, contributing to the downward pressure on the Euro.

Across the Atlantic, the recent US Retail Sales report indicated weaker consumer activity, bolstering the argument for potential Fed rate cuts later this year. Despite this, several Fed officials have maintained a cautious outlook. Boston Fed President Susan Collins remarked that it is premature to declare victory over inflation, while Richmond Fed President Thomas Barkin emphasized the need for more economic data before considering a rate cut.

This cautious tone from the Fed officials might limit the downside for the US Dollar in the near term, even as the market adjusts expectations based on mixed economic signals.

Technical Analysis

From a technical perspective, the EUR/USD pair has exhibited clear negativity, breaking below the 1.0720 level and settling beneath it. This move reinforces expectations of a continued bearish trend, driven by stochastic indicators suggesting further downside momentum.

Today, the EUR/USD pair rallied to the 0.618 Fibonacci retracement level, a critical juncture that often signals potential reversals or continuations of trends. The price action has shown clear negativity by breaking below the 1.0720 mark, settling into a bearish posture that suggests further declines. This bearish outlook is further reinforced by the pressure exerted by the 50-day Exponential Moving Average (EMA), which has acted as a significant resistance point.

The anticipated downside targets are situated at 1.0675 and 1.0600, reflecting key support levels that traders will be closely watching. The stochastic oscillator, which measures momentum, is currently aligned with this bearish trend, indicating that the negative pressure is likely to persist. Should the pair manage to hold below the critical 1.0795 level, the bearish trend is expected to continue. A break above this level, however, could invalidate the bearish scenario, potentially triggering a bullish reversal that could propel the price towards the next significant resistance at 1.0915.

Overall, the trading range for the EUR/USD pair is expected to be between the support level at 1.0660 and the resistance level at 1.0800 for the day. The broader trend remains bearish unless significant positive catalysts emerge to shift market sentiment.

TRADE RECOMMENDATION

SELL EURUSD

ENTRY PRICE : 1.0720

STOP LOSS : 1.0780

TAKE PROFIT : 1.0600

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