- There was a significant rise in US single-family home construction in July.
- The euro weakened to a six-week low.
- The Federal Reserve reported a 0.5% increase in manufacturing output.
Today’s EUR/USD outlook is bearish. The dollar has gained support from recent strong US economic data. This has reinforced the belief that interest rates will remain high for a considerable period.
–Are you interested in learning more about making money with forex? Check our detailed guide-
Notably, data indicated a significant rise in US single-family home construction in July. Moreover, there was an increase in future construction permits. Additionally, a separate report showed an unexpected rebound in US factory production for the previous month. This positive development follows Tuesday’s news of strong retail sales in July. Consequently, economists have revised their growth forecasts for the third quarter.
“Despite the burden of high-interest rates, the US remains remarkably resilient,” remarked Carol Kong, a Commonwealth Bank of Australia currency strategist. Furthermore, she noted that although inflation has significantly subsided, it remains far from the Federal Reserve’s 2% target.
As a result, Kong anticipates the Federal Open Market Committee (FOMC) to exercise patience and uphold a restrictive monetary policy to further combat inflation.
Meanwhile, minutes from the Federal Reserve’s July policy meeting demonstrated internal disagreements among officials regarding the necessity of additional rate hikes. Officials expressed concerns about pushing rates too far, reflecting potential economic risks.
Faced with a stronger dollar, the euro weakened to a six-week low at $1.0862. In an unexpected turn, US factory production rebounded in July due to a surge in motor vehicle output. However, despite this positive rebound, higher borrowing costs continue to hinder manufacturing activity. The Federal Reserve reported a 0.5% increase in manufacturing output for the previous month.
EUR/USD key events today
Investors expect the initial jobless claims report from the US to drop slightly. Moreover, the Philadelphia Fed Manufacturing Index is expected to rise in August.
EUR/USD technical outlook: Price descends further below 30-SMA.
The EUR/USD has made another bearish swing on the 4-hour chart, pushing the price farther below the 30-SMA. At the same time, bearish momentum has increased with the RSI trading nearer the oversold region.
–Are you interested in learning more about MT5 brokers? Check our detailed guide-
After breaking below the 1.0950 support, bears are targeting the 1.0850 support. Still, the price will likely consolidate before or after breaking below 1.0850. This is because bears will likely need to rest after a big swing.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Share
Saqib Iqbal
