Current trend

The European currency is being corrected after a rather active decline the day before and during the morning trading is testing the level of 1.0965 for a breakout, waiting for the emergence of new drivers to strengthen the upward movement.

The driver of the development of "bearish" dynamics was weak macroeconomic statistics from Germany. In June, Industrial Output fell 1.5% after -0.1% in the previous month, indicating a move towards the March value of -3.4%. In turn, the Consumer Price Index on a monthly basis remained at the same level of 0.3%, and on an annual basis it decreased from 6.4% to 6.2%, while the Harmonized CPI on a monthly basis increased from 0.4% to 0.5%, and the annual one adjusted from 6.8% to 6.5%, while the Harmonized CPI was fixed at 0.5% and 6.5%, respectively. Statistics indicate a high probability of an interest rate hike by the European Central Bank (ECB) at its September meeting.

As for the US currency, it continues its corrective movement and is at around 102.200 in the USD Index. At the beginning of the week, investors followed the comments of US Federal Reserve officials, who, as it turned out, were not unanimous in their opinion on further steps to adjust monetary policy parameters. Member of the Board of Governors of the US Federal Reserve Michelle Bowman said that the regulator needs to raise the interest rate several more times in order to return to the trajectory of a stable decline in consumer prices, and the President of the Federal Reserve Bank (FRB) of New York, John Williams, believes that the steps taken by the Fed are effective, therefore no new adjustments are required. Now all the attention of the monetary authorities and investors will be focused on the July inflation data, which will be presented on Thursday at 14:30 (GMT 2).

Support and resistance

On the daily chart, a downward correction continues, and the price is kept within the global ascending corridor with dynamic boundaries 1.1300–1.0760.

Technical indicators have already reversed and issued a new sell signal: the fast Alligator indicator EMAs crossed the signal line from below, and the AO histogram is forming descending bars while declining in the sell area.

Support levels: 1.0900, 1.0760.

Resistance levels: 1.1030, 1.1200.

Trading tips

Short positions can be opened after the price consolidates below the local support level of 1.0900 with the target of 1.0760. Stop-loss — 1.1000. Implementation time: 7 days and more.

Long positions can be opened when the price consolidates above the local resistance level of 1.1030 with the target of 1.1200. Stop-loss — 1.0950.