- Summary:
- EURUSD was on a three-week winning streak three sessions ago, and the US PCE data could have far-reaching impact on the pair this week.
The EURUSD pair traded flat in the New York session on Monday, going at 1.0883 at the time of writing. The euro snapped a three-week winning streak against the dollar last Thursday, and is on course to record the third straight session loss. The dollar’s strength on Monday got geopolitical support after US President Joe Biden withdrew from the 2024 US Presidential elections.
However, the highlight of the week will be Friday’s release of US Personal Consumption Expenditure (PCE) Index readings, which will provide guidance on the expected interest rate cuts in September. The May PCE price index declined more than expected, signaling a decline in US inflation rate. Most traders expect the Fed to announce a cut of 25 basis points in September. Also, the US second quarter GDP figures will be out on Thursday, and that too could inject volatility into the EURUSD currency pair.
Momentum indicators
The RSI momentum indicator on the daily chart is currently at 58, signaling underlying control by buyers. Also, the Moving Average Convergence Divergence (MACD) line is above the signal line, strengthening support for a potential bullish reversal.
Furthermore, the Fibonacci retracement tool shows that the price is currently near the previous reversal point at the 23.6% retracement mark. Therefore, a return above the corresponding price at 1.0883 could signal an impending upturn.
Support and resistance levels
The momentum on EURUSD signals control by the buyers above the pivot point at 1.0885. In that case, the next barrier will likely be encountered at 1.0891, beyond which extended control by the buyers could take the exchange rate higher to test 1.0895. Alternatively, a move below 1.0886 will favour the sellers to take control, with the downside likely to find the first support at 1.0883. A breach of that mark will strengthen the downside momentum and possibly result in further declines to test 1.0879.
