Risk of steeper decline once below 1.0950

EUR/USD Current Price: 1.0976

• Upbeat macroeconomic data from the United States brought relief to financial markets.
• The resurgence of risk appetite was not enough to support the euro.
• EUR/USD risks falling further, but buyers have not given up.

The EUR/USD pair settled in the 1.0970 region on Thursday after missing the 1.1000 mark in the face of upbeat macroeconomic figures from the United States (US). The pair held in a tight range for the first half of the day, but made a decisive move lower after the release of July retail sales, which unexpectedly rose 1%, beating the 0.3% advance expected by participants from the market. Initial jobless claims for the week ended August 9 rose by 227,000, better than the 235,000 expected.

The news brought relief and sent US indices sharply higher as investors cut their bets on a potential recession in the country. Later in the day, the US released less than encouraging figures: capacity utilization reached 77.8% in July, while industrial production for the same month fell 0.6%, missing expectations. However, stocks maintained positive momentum as EUR/USD pared some of its early losses.

By the end of the day, investors continued to believe that the Federal Reserve (Fed) will make its first rate cut during the September meeting, although it is still unclear whether it will be by 25 or 50 basis points (bps).

On Friday, the euro zone will release the trade balance for June, while the US will release the preliminary estimate of the Michigan consumer sentiment index for August and Michigan consumer inflation expectations for the same month.

EUR/USD short-term technical outlook

Technically, the daily chart for the EUR/USD pair shows that it could extend its slide. Technical indicators pulled back from near overbought levels, maintaining their downslopes in positive levels ahead of the Asian open. At the same time, the pair is developing above all moving averages, with the 20 Simple Moving Average (SMA) heading north around 1.0890. Finally, the 100 and 200 SMAs offer modest upward slopes well below the shortest, limiting the chances for a sustained slide, especially if the 1.0950 support level holds.

The pair is neutral to bullish according to technical readings on the 4-hour chart. Technical indicators lack directional strength within positive levels as EUR/USD struggles to bounce back above an upbeat 20 SMA after breaking through it earlier in the day. Longer moving averages are grinding north below the 1.0900 level, suggesting that buyers have moved to the sidelines but have not yet abandoned the pair.

Support levels: 1.0950 1.0900 1.0860

Resistance levels: 1.0970 1.1005 1.1045