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EUR/USD July 22 – Dips Below 1.35 on Tensions in

EUR/USD  has lost ground on Tuesday, as the pair  has again broken below the 1.35  line. Will the pair consolidate below this level? Continuing violence in Gaza and Ukraine has lent support to the safe-haven US dollar.  On the release front, it’s a busy day in the US, highlighted by Core CPI and Existing Home Sales. There are no Eurozone events on the schedule.

 Here is a quick update on what’s moving the pair.

  • EUR/USD moved lower in  the Asian session. This movement continued  in the European session  and the pair broke below  key resistance at 1.35.
  • Current range:  1.3450 to 1.35.

Further levels in both directions:   EURUSD. Daily Forecast July 22

  • Below: 1.3450, 1.34, 1.3375 and 1.33.
  • Above: 1.35, 1.3550, 1.3585, 1.3610, 1.3650 and 1.3677.
  • 1.3450 is providing weak support. 1.34 is next.
  • The round number of 1.35 an immediate resistance line. 1.3550 follows.

EUR/USD Fundamentals

  • 12:30 US Core CPI. Estimate 0.2%.
  • 12:30 US CPI. Estimate 0.3%.
  • 13:00 US HPI. Estimate 0.4%.
  • 14:00 US Existing Home Sales. Estimate 4.98M.  See how to trade this event with EUR/USD.
  • 14:00 US Richmond Manufacturing Index. Estimate 5 points.


*All times are GMT.

For more events and lines, see the  Euro to dollar  forecast.

EUR/USD Sentiment

  • Ukraine tensions continue: The blame game around the downing of MH17 continues with the Ukrainians and the Russians blaming each other. In addition, there are accusations of tampering with the evidence and looting of the belongings of the victims. Meanwhile, sporadic fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions within Europe does not bode well for the euro.
  • Gaza violence escalates: The fighting  has in  Gaza between Israel and Hamas has intensified as Israel’s land offensive  continues. As long as oil production in other countries is not disturbed, there will be no impact on the markets. Fighting in Gaza between Hamas and Israel continues to rage, as  the international community scrambles to try to get the  two sides to agree to a cease fire.
  • Mixed US data:  On the job front, things are improving quite nicely, with another drop in jobless claims and continuing claims. However, big  disappointments came from the housing sector  with significant drops in both building permits and housing starts. The mixed picture was also reflected in a  leap in the Philly figure  with unexciting retail sales.
  • Yellen  hints rate hike likely in 2015:  Federal Reserve Chair Janet Yellen concluded  two days of  testimony on Capitol Hill  last week. Yellen declined to directly answer questions about  when the Fed would begin to raise rates, but she did acknowledge that  most economists expect the Fed to  make a move  in the third quarter of 2015. The note about “stretched valuations” in some sectors of the equity markets caught investors’ attention and could serve as a hint that the Fed is set to tighten sooner.  The dollar eventually reacted positively.
  • Euro  inflation numbers  remain weak:  Try as it might, the ECB can’t seem to coax much inflation out of the Eurozone economy. Final euro-zone CPI for June  matched the early print at 0.5%  and shows that inflation remains at rock bottom levels. This is well below the central bank’s target of 2%. Germany, the Eurozone’s largest economy, is also suffering from weak inflation. PPI came in at a flat 0.0%, and the manufacturing inflation index has failed to post a gain in 2014. Faced with weak inflation and growth levels in the Eurozone, the ECB will be under pressure to take some action at its August policy meeting.        

More:  EUR/USD in downtrend as USD is on the move – Elliott Wave Analysis

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.