Euro Attempts Fightback Post Powell, US Data to Come

EUR/USD analysis

• Powell lays the foundation for the return of the euro.
• US economic data is in the spotlight including core PCE, GDP and durable goods orders.
• The main confluence area in question this week.

Basic outlook for the euro: bullish

The EUR is heading into the week in full swing after comments from Fed Chair Jerome Powell saw the Fed rate prospect “cautiously” re-priced. Another possibility 25 bits per second The rally in June has now waned as ECB officials continue their hawkish behaviour.

German data will lead the way from the perspective of the Eurozone being the major economic country and often used as a proxy for the EU area. However, the US will dominate the headlines as data-driven reliance gains traction. Core PCE and US GDP are the highlights and could undo Friday’s comments if inflation holds steady. The core PCE print is the Fed’s preferred level of inflation attracting more attention to the release.

From a debt ceiling perspective, positivity about a potential successful deal has reduced the dollar’s safe-haven appeal and could favor the euro as the week goes on.

Economic calendar for EUR/USD (GMT +02:00)

source: DailyFX Economic Calendar

Technical Analysis

EUR/USD daily chart

Chart created by Warren VenkitasI.G

EUR/USD daily price action at an interesting level is trading around 1.0800 The psychological handle after breaking the main trend line. A daily close above this area may provide a floor for the EUR next week.

resistance levels:

• 1.0900 / 50-day MA (yellow)
• Trend line support

Support levels:

IG client sense data: smitten

The IGCS shows that retailers are currently on board long On EUR/USD, with 57% of traders who are currently holding long positions (as of this writing). At DailyFX, we usually take a contrarian view of crowd sentiment which results in a short-term bearish bias.

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