EURUSD is currently testing a key area of interest as seen on its daily time frame. Price might bounce from this resistance turned support area, which has held since September last year.
A bounce could lead to a rally up to the next area of interest near the 1.3500 major psychological level, which has acted as support so far this year. On the other hand, a strong break below the 1.3300 mark could mean long-term losses for the euro until the 1.3100 major psychological level.
EURUSD Forex Outlook
The fundamental bias for the euro has been to the downside ever since the ECB announced several interest rate cuts back in June in order to stimulate economic growth. The central bank is planning on implementing targeted long-term refinancing operations in September and December to add more liquidity in the economy and boost lending and spending.
To top it off, the central bank is also gearing up for potential purchases of asset-backed securities as their latest statement showed that they are preparing a program to ensure that these funds support the economy.
Meanwhile, the US has seen considerable economic improvements, although some headline figures have failed to impress. The FOMC is reluctant to show excitement on the recent economic recovery in an effort to keep market expectations contained.
Event risks for the euro today include the German ZEW economic sentiment report, which could mark a large drop in confidence. As for the US, the retail sales data is up for release and strong gains could lead to support for the US dollar.
The EURUSD downtrend appears strong enough to lead to a break of the support area sooner or later. Euro zone GDP reports are due later this week and signs of a slowdown could lead to a breakdown, as the Russian sanctions threaten to weigh on growth later on.
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