Daily Analysis EURUSD - 31 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 expressed concerns about the near-term economic outlook and the uncertainty surrounding inflation. Her dovish tone weighed on the euro, while positive macroeconomic data from the US boosted the US Dollar, causing 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 increased more than expected in June, and weekly Initial Jobless Claims declined.

PCE data came close to what’s forecasted, not making that much impact but signaling that inflation may become sticky on some levels.

Today the data for CPI and GDP from the EU will have an impact on the EUR/USD and projections on inflation developments and the probability of recession in the EU.

The EUR/USD 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