Early in the Asian session, the Euro is trading at around 1.0444, bouncing back after reaching the low1.043. A slight recovery towards the 2/8 Murray area located at 1.0480 is likely.
According to the 4-hour chart, we can see that the rising wedge pattern confirmed the bearish signal. EUR/USD is expected to resume its downward trend in the coming days and could reach the zone 1.0376. The price could even fall to 0/8 Murray at 1.0253.
Our outlook remains negative for the Euro only if it trades below the 21 SMA (1.0530) and below the 200 EMA (1.0584). 1.0620 is the key level for the euro to resume the bullish cycle. For this, it should consolidate above 3/8 Murray.
Any pullback towards the 21 SMA located at 1.0530 or towards the 200 EMA located at 1.0580 will be a signal to sell. The euro is likely to remain under downward pressure below this area.
Jerome Powell explained that Fed policymakers had decided to raise the official interest rate by 75 basis points after observing the increase in inflation expectations by the survey of consumer sentiment from the University of Michigan.
Therefore, the US dollar gained strength after the Conference Board data and pushed EUR/USD to turn lower. Until the second week of July, the euro is expected to trade under strong downward pressure in the face of Fed's policy announcement and the increase in the interest rate.
Despite the expected downward pressure in the coming days, a technical bounce could occur in the next few hours. In case the euro reaches the resistance zone at 1.0498 (2/8 Murray), it will be a signal to sell with targets at 1.0430 and 1.0376 (1/8 Murray). The eagle indicator is giving a negative signal which supports our bearish strategy.
