EUR/USD commences the last week of July at 1.1369. Friday’s modest decline in energy prices diminished expectations that the Federal Reserve might raise rates as soon as its forthcoming meeting, set for Tuesday and Wednesday. Simultaneously, the primary currency pair hovers near the monthly low established in late June. Markets persist in anticipating a minimum of one Federal Reserve rate increase prior to the conclusion of the year. Inflation risks have increased in light of a renewed escalation in the US–Iran conflict. Restrictions on the movement of energy tankers in the Persian Gulf and the Red Sea have resulted in an increase in oil and fuel prices. Additional support for the dollar is being bolstered by robust US economic data. S&P PMIs indicated the swiftest rate of expansion in private business activity observed this year.
Meanwhile, the number of initial jobless claims decreased at the most rapid rate in almost sixty years, affirming the robustness of the labour market. On the H4 chart of EUR/USD, the market has established a consolidation range centred around the 1.1389 level, currently fluctuating between 1.1336 and 1.1413. This range is approaching its conclusion. An upside breakout would indicate a corrective move towards 1.1420, followed by a decline to 1.1313. A direct downside breakout would pave the way for a movement towards 1.1313. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum. On the H1 chart, the market has reached the 1.1414 level following a completed upward movement. A consolidation range is presently taking shape beneath this level.
Today, a decline to 1.1390 is anticipated, succeeded by an ascent to 1.1420, and subsequently a drop to 1.1370, with potential for the trend to extend to 1.1313. The Stochastic oscillator corroborates this scenario, as its signal line remains beneath 80 and trends downward towards 20, suggesting a rise in short-term downside pressure. EUR/USD continues to face downward pressure as it nears the conclusion of July, lingering close to its monthly lows. The slight decline in energy prices observed at the conclusion of last week temporarily dampened expectations for an imminent Federal Reserve rate hike; however, market participants still anticipate at least one increase prior to the year’s end.
Renewed tensions between the US and Iran, coupled with supply disruptions in the Persian Gulf and the Red Sea, have led to an increase in oil prices, thereby heightening inflationary concerns. Strong US economic data, characterised by robust PMI readings and a notable decline in jobless claims, continues to bolster the dollar. Technically, the pair may experience a short-term corrective movement towards 1.1420; however, the overarching bearish framework persists, indicating potential declines towards 1.1313. The Federal Reserve meeting this week will serve as the pivotal catalyst.