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EUR/USD Price Prediction – Euro Remains Under Pressure

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·2 min read
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Key Insights

  • EUR/USD has quickly moved towards the 1.0400 level after the successful test of the support at 1.0500.

  • Economic data from Germany served as an additional bearish catalyst for the European currency. 

  • A move below 1.0400 will push EUR/USD towards the support level at 1.0385.

Germany’s Economic Data Disappoints

EUR/USD is currently trying to settle below 1.0400 as the U.S. dollar continues to gain ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to settle above the 105 level and made an attempt to settle above 105.50. Yearly highs were reached on June 15 near 105.80, so the American currency is already close to these highs. It should be noted that the U.S. dollar has not been that strong since 2002.

Today, the EU reported that Euro Area Unemployment Rate declined from 6.7% (revised from 6.8%) in April to 6.6% in May, while analysts expected that it will stay at the 6.8% level.

In Germany, the Retail Sales report indicated that Retail Sales declined by 3.6% year-over-year in May, compared to analyst consensus which called for a decline of 2%. Germany’s Unemployment Rate increased from 5% in May to 5.3% in June compared to analysts consensus of 5%. The disappointing reports from Europe’s leading economy put additional pressure on the European currency.

In the U.S., traders focused on Personal Income and Personal Spending reports for May. Personal Income increased by 0.5% month-over-month, in line with the analyst consensus. Personal Spending increased by 0.2% month-over-month, compared to analyst consensus of 0.4%. The disappointing Personal Spending report put pressure on equities and increased demand for safe-haven assets, which was bullish for the U.S. dollar.

EUR/USD Tests Support At 1.0400

EUR/USD managed to settle below the support at 1.0435 and is testing the next support level at 1.0400.

In case this test is successful, EUR/USD will move towards the support at the recent lows at 1.0385. A move below this level will push EUR/USD towards the support level at 1.0360.

On the upside, the previous support level at 1.0435 will serve as the first resistance level for EUR/USD. In case EUR/USD climbs above this level, it will head towards the resistance at 1.0470. A successful test of this level will open the way to the test of the next resistance at 1.0500.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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