Following two consecutive sessions of losses, the Euro (EUR) has managed to regain its composure and overcome some of the recent pessimism against the US Dollar (USD). This has resulted in EUR/USD showing resilience and attempting to surpass the psychological barrier of 1.1000 on Wednesday. The improved overall sentiment in terms of risk appetite has put pressure on the Greenback, giving the pair an extra boost in the middle of the week. This is happening at a time when there is still uncertainty regarding the direction of both US and German yields, as market participants eagerly await the release of important US inflation data measured by the Consumer Price Index (CPI) on Thursday. In the broader context of monetary policy, there have been no notable changes. Investors still anticipate that the Federal Reserve will maintain its current interest rates for the rest of the year, while the European Central Bank (ECB) is facing internal divisions within its Council regarding the continuation of its tightening measures after the summer. In terms of economic data, Mortgage Applications contracted 3.1% in the week ended on August 4 according to the Mortgage Bankers Association (MBA).
EUR/USD manages well to attempt a decent rebound and refocus its attention to the key 1.1000 region so far on Wednesday. Breaking through the 1.0920 range, where the monthly low aligns with the crossing of the interim 55-day and 100-day SMAs exposes EUR/USD to potential downside movement. This could drive spot toward the July low of 1.0833 (July 6). Such a downward move might precede a further decline toward the significant 200-day SMA at 1.0760 ahead of the May low of 1.0635 (May 31). Deeper down lies the March low of 1.0516 (March 15), and subsequently, the 2023 low at 1.0481 (January 6). In contrast, sporadic bullish attempts could encourage the pair to challenge the psychological 1.1000 mark prior to the so far August high at 1.1041 (August 4) and the weekly top at 1.1149 seen on (July 27). Should this level be surpassed, it might help alleviate some of the downward pressure, potentially motivating the pair to test the 2023 peak of 1.1275 (July 18). Once this threshold is breached, significant resistance levels become less prominent until the peak of 2022 at 1.1495 (February 10), closely followed by the round level of 1.1500. Furthermore, the optimistic outlook for EUR/USD remains valid as long as the pair maintains its position above the crucial 200-day SMA.