- The Euro started an upward move after trading as low as 1.1301 against the US Dollar.
- There is a major bearish trend line in place with resistance near 1.1485 on the 4-hours chart of EUR/USD.
- The Euro Zone CPI in July 2018 decreased 0.3%, compared with the last 0.1% increase.
- The yearly change was 2.1%, similar to the last reading and forecast.
EURUSD Technical Analysis
The Euro was under a lot of pressure this past week below the 1.1400 support level against the US Dollar. The EUR/USD pair declined sharply, tested the 1.1300 support area, and later started a correction.
Looking at the 4-hours chart, the pair started a decent upward move and traded above the 1.1350 and 1.1370 resistances. There was also a break above the 23.6% Fib retracement level of the last decline from the 1.1628 high to 1.1301 low.
However, the pair is now approaching a crucial resistance zone near 1.1480-1.1500. There is also a major bearish trend line in place with resistance near 1.1485 on the same chart.
Moreover, the 61.8% Fib retracement level of the last decline from the 1.1628 high to 1.1301 low is at 1.1503 to act as a major resistance. Finally, the 100 simple moving average (red, 4-hours) is positioned near the last support area at 1.1540, which is likely to act as a barrier for buyers.
Therefore, if the pair continues to move higher, it could face many resistances like 1.1480, 1.1500 and 1.1540. On the downside, supports are aligned at 1.1400, 1.1365 and 1.1310.
Recently, the Euro Zone CPI report for July 2018 was released by Eurostat. The market was looking for a decline of 0.3% in the CPI in July 2018 compared with the previous month.
The actual result was similar to the forecast as there was a decrease of 0.3% decrease in the CPI, compared with the last 0.1% increase. Moreover, the yearly change was 2.1%, similar to the last reading and forecast. The report added that:
In July 2018, the highest contribution to the annual euro area inflation rate came from energy (+0.89 percentage points, pp), followed by services (+0.64 pp), food, alcohol & tobacco (+0.49 pp) and non-energy industrial goods (+0.12 pp).
Overall, the Euro could continue to move higher, but it won’t be easy for buyers to clear the 1.1500 and 1.1540 resistance levels in the near term.