EUR/USD Analysis: Decline towards 1.1106 is still possible

  • The ECB will consider revising its inflation target.
  • US data better than expected
  • The EUR/USD is on its way to break the July low of 1.1181, which then shifts the focus to a test of 1.1106.
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The EUR/USD hit a high of 1.1243, while the dollar weakened broadly, leading to a downward movement at 1.1204 in the middle of the London session. The decline was the result of some headlines from ECB members referring to the inflation target of “below but close to 2.0%”. The dollar’s weakness helped recover to 1.1220 before the U.S. data was released.

U.S. initial applications for unemployment benefits were 216K in the week ending July 12, while the Philadelphia Fed manufacturing index performed better than the 5.0 forecast and the previous result of 0.3 in June. The data gave the greenback a boost. Later, the Fed will be expected to speak to Bostic and Williams.

EUR/USD short-term technical outlook

THE EUR/USD withdrew from the 23.6% retracement from the range of 1.1245 after several attempts failed to overcome the 38.2% retracement. The four-hour chart signals that the bears are on the rise, while the pair fell below the 20-SMA, while the 100-SMA has fallen below the 200-SMA. The technical indicators resumed their downward movement on the above-mentioned chart after approaching their centerlines, which supports a decline below the monthly low of 1.1181.

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