Daily Analysis EURUSD - 26 July 2023

Germany's IFO Business Climate Index declined to 87.3 in July, missing expectations of 88.0 and down from the previous value of 88.6. Additionally, the Current Economic Assessment for the same month was reported at 91.3, compared to June's 93.7 and the projected 93.0. Furthermore, the IFO Expectations Index, which indicates firms' outlook for the next six months, dropped to 83.5 in July, lower than the previous value of 83.8 and the market forecast of 83.0. Following this mostly negative economic data from Germany, IFO Economist Klaus Wohlrabe commented that the "German GDP is likely to contract in the third quarter."

On the other hand, the US Conference Board (CB) Consumer Confidence surged to 117.0 in July, up from the revised figure of 110.10 in the previous period, surpassing market expectations of 112.10. The survey also revealed a slight decrease in one-year consumer inflation expectations to 5.7%, while the Present Situation Index and Consumer Expectations Index rose to 160.0 and 88.3, respectively, for the same month.

Today's Fed meeting, which the market has priced with almost 100% certainty to result in a 25bp hike, may provide insight into the Fed members' future projections, specifically whether they plan to pause at the current interest rate levels or implement another rate hike later this year. Markets are confident that this potential hike could be the final one in the current tightening cycle.

The EUR/USD has found support at the 1.1040 level, which coincides with the lower boundary of the current bearish channel. An upward correction is now underway, and the next target for the pair could be the median line at the 1.1100 level. In case of a sudden breakout, the pair may move toward the 200MA support level.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1400	1.1300	1.1250	1.1085	1.1046	1.1000