- EUR/USD price is struggling to post gains.
- The fundamental outlook is not quite bearish.
- The pair seems to pause ahead of a fresh buying impulse.
The EUR/USD currency pair outlook on Tuesday, July 20, continued to slowly but surely slide down. Volatility for the pair remains rather weak, and the macroeconomic background is almost completely absent. Thus, the nature of the current movement remains quite logical.
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Recall that we expect the pair to decline to the 1.17 level, as this option is very logical from a technical point of view. On the daily timeframe, the global turn of the corrective movement against the uptrend continues. However, at the same time, we cannot fail to note that the downward movement is very weak.
This means that the US Dollar is very reluctant to rise. By and large, most of the distance that the pair has moved down in recent weeks is covered in a couple of days after the last Fed meeting. There was very little movement after this and before this event.
Thus, it can be assumed that the US currency is not in demand now, and traders are waiting for the right moment to start fresh buying. Recall that a couple of months ago, the pair’s quotes were close to their 3-year highs but could not sustain the gains. Then we assumed that the bulls did not have enough strength for this, so they paused for a while, which could be nothing more than an acceleration before a new attempt to reach the 1.23 level and the continuation of the formation of an uptrend.
We would also like to remind you that fundamental global factors have not changed recently, so we do not expect further US Dollar growth. By and large, the movement of recent weeks can be called justified only based on one factor. This factor is a little more hawkish rhetoric from the Fed than the ECB.
Even then, the phrase voiced by Jerome Powell that the Fed may start discussing the curtailment of the quantitative stimulus program seems to have made the Fed chairman regret what he said several times. At least in all his subsequent speeches, Powell did not repeat this thought. On the contrary, he stated that the Fed will continue to stimulate the economy since the labor market is still very far from its pre-pandemic levels.
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EUR/USD technical outlook:
The EUR/USD price looks vulnerable below 1.1800. The volume is quite bearish at the moment. The Upside attempt on Tuesday proved to be a dead cat bounce. The price remains capped by the 20 and 50 SMA on the 4-hour chart. Any downside invalidation needs a sustained move beyond the 1.1860 mark.
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Saqib Iqbal
