Daily Analysis EURUSD - 28 July 2023

The European Central Bank (ECB) raised key rates by 25 basis points as expected in the July policy meeting. However, ECB President Christine Lagarde's expression of concerns about the near-term economic outlook and inflation uncertainty had a dovish impact on the euro. On the other hand, positive macroeconomic data from the US strengthened the US Dollar, resulting in a sharp decline in EUR/USD.

The US economy grew at an annual rate of 2.4% in the second quarter, exceeding market expectations of 1.8%. Additionally, Durable Goods Orders rose more than expected in June, and weekly Initial Jobless Claims declined.

ECB policymakers Boštjan Vasle and Madis Muller made contrasting statements, with Vasle mentioning the possibility of either hiking or pausing rates in September, while Muller stated that future ECB decisions were no longer obvious. However, these statements failed to support the euro.

Later in the day, the US will release the Personal Consumption Expenditures (PCE) Price Index data for June, with a forecasted monthly rise of 0.2%. Despite a decline in the Core PCE Prices in the second quarter, a soft monthly PCE inflation reading is not expected to be surprising at this point.

The EUR/USD selloff continued after the ECB meeting, and now the price is testing the last support level along the downward parallel of the bullish long channel. A potential recovery from this level may help the EUR/USD maintain a bullish outlook in the long term. However, if the price breaks below the current support level, it could lead to a further decline toward the next support level at 1.0850, opening new possibilities for the currency pair.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1210	1.1180	1.1120	1.1085	1.1046	1.1000