Jakarta, GIC Trade – The euro moved below the $1.10 mark, approaching the one-month low of $1.094 reached on August 2, as ongoing fiscal concerns in the US shifted selling pressure onto Treasuries and triggered a new rebound for the US dollar ahead of inflation data.

The euro was also pressured by further evidence of economic slowdown in the largest economy of the currency bloc, limiting the likelihood that the European Central Bank (ECB) will extend its tightening cycle at the upcoming September meeting.

Following a series of PMI figures showing a sharper contraction in private sector activity during July, new data revealed that industrial output in Germany had plunged far beyond expectations in the previous month.

Meanwhile, the ECB raised borrowing costs by 25 basis points last month, and President Lagarde emphasized that the central bank's forthcoming decisions would be purely data-driven.

The weakness of the euro was also seen after the dollar index rose by 0.26% to 102.34, moving away from the one-week low reached on Friday following mixed US jobs reports that indicated a cooling labor market, yet still robust.

This adds to hopes of a soft-landing scenario in the world's largest economy, even amid the Federal Reserve's aggressive rate hikes.

Market participants are now focused on Thursday's inflation data, where core consumer price expectations in the United States have risen by 4.8% year-on-year in July.

Fundamentally, the economic slowdown in the largest economy of the currency bloc, namely Germany, has further pressured the euro, limiting the ECB's chances of extending its tightening cycle at the upcoming September meeting. So, how does it look technically? Here’s the analysis:


Technical Analysis



EUR/USD on the one-hour chart is attempting to move downward, touching the support level at 1.09790 and heading towards the next support level at 1.09460. The downtrend is also reflected in the FXBot template, where the EUR figure is lower by 4.4 compared to the USD figure of 8.0. Meanwhile, the bearish bias is supported by a sell signal indicated by the red arrow.

This Forex or Commodity analysis is based on the author's fundamental and technical perspectives and does not constitute advice or solicitation. For more information, click the image below.