FOREX Fundamental analysis for EUR/USD on June 28, 2024
A week ago, we noted the difficult situation in which EURUSD found itself: On the one hand, the pair is under pressure from political instability in France, on the other hand, the slowdown in the US economy. Since then, the situation has stabilized a little: rumors about Frexit have subsided, and disappointing economic data from the United States gave reason to think that the asset has finally found the bottom. However, Donald Trump unexpectedly intervened in Forex currency trading.
The upcoming presidential elections in the United States are of serious concern. On the one hand, a candidate with a criminal record, on the other hand, an elderly person who cannot speak publicly without medical assistance. The first debate showed the advantage of a younger Trump, whose protectionism could disrupt supply chains and trigger a new wave of inflation. This will force the Fed not only to keep the rate at 5.5%, but also to consider the possibility of tightening monetary policy. Great news for EURUSD sellers.
As noted earlier, the presidential debate may be more important than the risks of the collapse of the Eurozone and American statistics. Despite a decline in business equipment orders and an increase in the number of repeated applications for unemployment benefits to a maximum since 2021, Donald Trump releases are far away.
Trump's return to power accelerates economic risks, overshadowing factors such as leveling Americans' excess savings with a threat to the labor market. Even Rafael Bostic's "dovish" statements about the need for a rate cut failed to disperse the volatility of currency pairs, although the head of the Atlanta Federal Reserve said that a rate cut would be the first step in a series of measures to ease monetary policy.
The pressure on the EURUSD has also increased due to the widening of the spread between French and German bonds. Before the first round of elections to the National Assembly, investors are worried about a possible victory for the right. These fears intensified after Germany's statement about the ECB's unwelcome intervention in the debt market to support French securities.
A decrease in political tension may remove the threat of Frexit, and the deterioration of American statistics will force the Fed to return to considering the issue of rate cuts. This gives hope that the EURUSD has found the bottom and is ready to grow. But Trump's intervention, trade wars and a possible correction of the S&P 500 could lead to a further drop in the pair.
In such circumstances, you need to be ready to act in both directions. A breakout of support at 1.0665 can be considered a signal for selling EURUSD, and a successful breakout of resistance at 1.0725 can be considered a signal for purchases.
EUR/USD Technical analysis
After working out the sellers' target, EUR/USD went into an upward correction, and if the movement continues today, we will wait for the test of the resistance area 1.0758 - 1.0750. From here, we suggest considering new entries into short positions with targets in the range of 1.0712 - 1.0666.
We remind you that there are no signals of a change in direction of movement so far, and the short-term trend remains downward. We will wait for the update of the minimum from June 26 and the breakthrough of the Target zone 1.0664 - 1.0638. If the price is fixed below this area, then the next target of the "bears" will be the Golden zone 1.0580 - 1.0571.