Market Analysis

EURUSD Finds Temporary Support Near 1.0660, Downside Pressure Persists

Amos Simanungkalit · 27 Jun17.4K Views

EUR/USD has shown a modest rebound during the European session on Thursday, recovering from its recent drop to a seven-week low around 1.0665 observed the day before. Support for the major currency pair comes as the US Dollar (USD) struggles to extend its gains amidst uncertainty ahead of the US core Personal Consumption Expenditures (PCE) Price Index data for May, scheduled for release on Friday. However, short-term demand remains fragile amid concerns over widening policy differences between the US Federal Reserve (Fed) and the European Central Bank (ECB).

The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, faces resistance around the key level of 106.00.

Market focus is keenly on the upcoming US core PCE inflation data, which will offer insights into the timing and scale of potential Fed interest rate cuts this year. Projections suggest that core inflation may have increased by 0.1% month-on-month in May, down from 0.2% in April. Annually, underlying inflation is expected to ease to 2.6% from 2.8% in April.

Softer-than-expected inflation figures could heighten expectations of earlier Fed rate cuts, which typically weighs on the US Dollar. Conversely, stronger-than-expected data could diminish expectations of imminent rate cuts.

Currently, financial markets anticipate the Fed to initiate rate cuts starting at the September meeting, with further reductions possibly following in November or December.

Technical Analysis: EUR/USD remains below 1.0700

EUR/USD is trading within Wednesday's trading range as market participants await the US core PCE inflation data. The pair faces resistance from the downward trendline of a Symmetrical Triangle pattern on the daily chart, presenting a significant hurdle for Euro bulls. A clear breakdown below this pattern could signal further downside momentum.

The pair is positioned below its 200-day Exponential Moving Average (EMA) near 1.0780, indicating a bearish trend bias.

The 14-period Relative Strength Index (RSI) is hovering around 40.00, suggesting neutral to bearish momentum. A drop below this level could signal increased selling pressure.