This week, the EUR/USD pair tried to break through the 1.1770 mark, but the news from the US Federal Reserve radically changed the balance of forces between sellers and buyers.
On Wednesday, the US regulator expected to leave the interest rate unchanged at 0.25%. The accompanying statement indicated that the US Federal Reserve will continue to buy assets in the amount of $120 billion per month until there is progress in employment and price stability. The head of the department, Jerome Powell, noted at a press conference that monetary policy will remain supportive until the economic recovery is completed.
The soft rhetoric of the US regulator caused a sell-off of the US dollar, strengthening of risky assets and commodities. Now the dollar index futures are trading at the price of 91.94. The target for the index's fall in the medium term is seen in the area of 91.29-91.10.
Today, investors' attention will be focused on the publication of data from the eurozone on inflation and GDP. The consumer price index is expected to rise to 2.0% in annual terms in July from 1.9% in June. In turn, GDP can grow by 1.5% in quarterly terms, and in annual terms-by a record 13.2%. If the actual data justify the forecasts of investors or exceed them, then we can expect further strengthening of the euro.
Support and resistance levels
The long-term trend for the euro is ascending within the framework of the forex forecast. In July, market participants tried to break through the "neck line" to form a "head and shoulders" reversal figure on the daily chart, but the 1.1770 mark resisted. The retention of this strong support level led to an increase in prices with a target in the area of 1.1959–1.1937.
The medium-term trend remains downward for the time being. The key resistance is at 1.1945–1.1928. Just above this price area is the resistance level of 1.1957. Now the price is trading in a correction, within which all resistance levels were broken, so the instrument has no further obstacles to growth in the area of 1.1945–1.1928.
Resistance levels: 1.1937, 1.1959, 1.2126.
Support levels: 1.1846, 1.1770, 1.1717
Trading Scenarios
Thus, EUR/USD forecast of the euro dollar for August 2-3, 2021, long positions can be opened above the level of 1.1846 with a target of 1.1959 and a stop loss of 1.1810. Implementation period: 7-9 days.
Short positions can be opened below the level of 1.1790 with a target of 1.1717 and a stop loss of 1.1826.