The EURUSD exchange rate saw an uptrend beginning June 26, peaking at 1.09480 on July 17, before reversing into a bearish failure swing pattern, indicating a potential downtrend.
This analysis identifies key upside and downside targets for traders. Additionally, it considers the Federal Reserve's upcoming interest rate decision on July 31, which could significantly impact the EURUSD exchange rate. A hawkish stance from the Fed might strengthen the USD, while a dovish approach could favor the euro.
Overview
The EURUSD exchange rate saw an uptrend beginning June 26, peaking at 1.09480 on July 17, before reversing into a bearish failure swing pattern, indicating a potential downtrend.
This analysis identifies potential key upside and downside targets for traders. Additionally, it considers the Federal Reserve's upcoming interest rate decision on July 31, which could significantly impact the EURUSD exchange rate. A hawkish stance from the Fed might strengthen the USD, while a dovish approach could favor the euro.
High Impact Economic Events
Tuesday All Day: German Prelim CPI m/m (EUR)
Tuesday 02:00 pm (GMT+0): JOLTS Job Openings (USD)
Tuesday 02:00 pm (GMT+0): CB Consumer Confidence Index (USD)
Wednesday 01:30 am (GMT+0): CPI q/q (AUD)
Wednesday 01:30 am (GMT+0): CPI y/y (AUD)
Wednesday 01:30 am (GMT+0): Manufacturing PMI (CNY)
Wednesday Tentative: BOJ Policy Rate (JPY)
Wednesday 09:00 am (GMT+0): Core CPI Flash Estimate y/y (EUR)
Wednesday 12:15 pm (GMT+0) ADP Non-Farm Employment Change (USD)
Wednesday 12:30 pm (GMT+0): GDP y/y (CAD)
Wednesday 02:00 pm (GMT+0): Pending Home Sales m/m (USD)
Wednesday 06:00 pm (GMT+0): Federal Funds Rate (USD)
Wednesday 06:30 pm(GMT+0): FOMC Press Conference (USD)
Thursday 11:00 am (GMT+0): BoE Interest Rate Decision (GBP)
Thursday 12:30 pm (GMT+0): Unemployment Claims (USD)
Thursday 02:00 pm (GMT+0): ISM Manufacturing PMI (USD)
Friday 12:30 am (GMT+0): Nonfarm Payrolls (USD)
Technical Analysis
The latest uptrend that began on June 26 ended when the EURUSD exchange rate hit the 1.09480 mark on July 17, after bouncing from 1.06659. This led to a bearish reversal, known in technical analysis as a failure swing, indicating a potential downtrend. Specifically, the peak at 1.08699 failed to surpass the previous peak at 1.09480 and dropped below the trough of 1.08256, hence the failure swing. Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator support the bearish outlook. Prices are below the EMA and the Momentum registers values below the 100 baseline.
Potential Upside Targets
If the bulls manage to take control of the market, traders may find potential opportunities in the following three upside targets:
1.08699: The first resistance level is determined at 1.08699 representing a daily high marked on July 25.
1.09480: The second upside target is expected to be 1.09480, which corresponds to the daily high marked on July 17.
1.09470: An additional price target is estimated at 1.09470, aligning with the R3 resistance calculated using the weekly Pivot Points method.
Potential Downside Targets
If the bears manage to maintain control of the market, traders may consider the following four potential downside targets:
1.07840: The first price target is identified at 1.07840, aligning with the S2 support line calculated using the weekly Pivot Point method.
1.07579: The second line of support is 1.07579, reflecting the 261.8% Fibonacci Extension drawn from the swing low at 1.08256 to the swing high at 1.08699.
1.07238: An additional support level is set at 1.07238, corresponding to an internal trendline.
1.06659: The fourth support is positioned at the daily low of 1.06659, marked on June 26.
Fundamental Analysis
The Federal Reserve is set to announce its decision on interest rates on July 31, 2024. Most analysts anticipate that the Fed will maintain the rate within the range of 5.25%-5.50%. However, investors will carefully scrutinize the accompanying statement and economic projections for hints about future policy directions. This announcement holds great significance for the EURUSD exchange rate, which has been relatively steady in anticipation. Traders are eagerly awaiting the Fed's guidance on inflation and economic growth, as this could impact the value of the US Dollar relative to the euro. A hawkish stance could strengthen the USD, while a dovish outlook might favor the euro.
Conclusion
In summary, the EURUSD exchange rate's recent uptrend, peaking on July 17 at 1.09480, has transitioned into a bearish reversal, indicating potential further declines. Traders should watch key upside targets if bulls regain control and downside targets if bearish momentum continues. Additionally, the Federal Reserve's upcoming interest rate decision on July 31 is highly anticipated, potentially impacting the EURUSD pair. A hawkish Fed could strengthen the USD, while a dovish stance might favor the euro, highlighting the importance of staying informed on both technical and fundamental analysis in this volatile market.