Before a succession of risk-related developments, the EUR/USD closed the day flat, having rebounded from the 1.1700 take-profit level. As per OCBC Bank’s analysts, unfavorable risks continue to outweigh good prospects for the unit for the time being, notwithstanding recent improvements.
The technical indicators, core risk-off sentiment, and the forthcoming Federal Open Market Committee announcement all work together to maintain the duo’s adjusted average price in the negative territory. The pair is continuing to choose for short positions on gains, notably in the area of 1.1800, with a target of 1.1680/00 as next.
The EUR/USD is taking the opportunity to recover from its previous day’s drop and is currently trading at about 1.1750. The US dollar has given up some of its recent gains, but it is still trading over the 93.00 level. It is possible that Evergrande’s fears about indebted China, along with Fed uncertainties, would stop the currencies from making further gains in the short run.
Review Of The Technical Aspects
EUR/USD CHART. Source: Tradingview.com
In the slow start to Tuesday’s Asian session, the EUR/USD maintains its defensive effort from the earlier day, which is close to a monthly bottom. As a result, the main currency pairing is now fluctuating at 1.1730 at the time of publication. Even though the couple’s constructive recovery on Monday was prompted by horizontal support that had been in place for six weeks, two-month-old support, which is now a barrier, as well as the 50-day moving average, provides obstacles to further gains amid bearish MACD indications.
As a result, any comeback is becoming less significant until it clears the initial horizontal barrier at 1.1755, which is accompanied by the 50-day moving average level around 1.1795 and the 1.1800 resistance. If the EUR/USD price crosses the 1.1800 level, the bulls will be called into question by the mid-August high at 1.1805 and a falling resistance level from late June, which is now around 1.1895.
Review of the Basics
In light of the collapse of China’s real estate juggernaut Evergrande and the Federal Reserve’s next meeting, the yield on the 10-year US Treasury note has climbed to 1.32 percent, which is helping to keep the greenback from falling much more. Chairman Jerome Powell has said that he expects the Federal Open Market Committee (FOMC) to reduce monthly asset purchases during its two-day conference beginning on Wednesday. However, Chairman Jerome Powell has cautioned that this should not be interpreted as a signal of an impending rate hike sooner rather than later.
Furthermore, the S&P 500 futures contract is currently trading at 4,361, representing a 0.30 percent gain for the day. Because of a scarcity of new trading data in the EUR docket, investors have turned their focus away from the EUR and toward the US Present Financial Records, Residential Investment, and construction permits to get new trade data.