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Daily Technical Insights 25th July 2023


Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

EUR/USD (4 Hours)

EUR/USD Extends Decline as Eurozone PMIs Miss Expectations Ahead of Central Bank Meetings

The EUR/USD currency pair continued its downward trajectory, marking its fifth consecutive day of losses and reaching its lowest daily close since July 12. The euro’s correction lower follows its earlier peak at around 1.1300, which was the highest level in over a year. Economic data from the Eurozone, particularly the disappointing Manufacturing PMI at 42.7 and Services PMI at 51.1 in June, along with a Composite Index of 48.9, the lowest since November, raised concerns about the region’s economic strength and potential recession risks. Despite this backdrop of economic weakness, the European Central Bank (ECB) is still anticipated to implement a 25 basis point interest rate hike on Thursday, with the market closely watching the bank’s messaging for further cues.

As market participants positioned themselves for the Federal Reserve’s decision, US Treasury yields experienced a slight increase. The Fed is expected to raise its key rate by 25 basis points on Wednesday, making the central bank’s statements crucial for the direction of the US Dollar and financial markets overall. The US PMI data showed mixed results, with the Services PMI falling to 52.4 in July, below the expected 54, while the Manufacturing PMI rebounded to 49, exceeding the market consensus of 46.4. Amidst these developments, the DXY (Dollar Index) continued to rise, exerting downward pressure on the EUR/USD pair. Though some stabilization may occur prior to the Fed meeting, increased volatility is expected in the coming sessions. Key events to monitor include the German IFO survey and US housing data on Tuesday.

Chart EURUSD by TradingView

According to technical analysis, the EUR/USD pair is moving lower on Monday creating a push to the lower band of the Bollinger Band and creating a wider gap between the bands. The Relative Strength Index (RSI) is currently at 31, suggesting that the EUR/USD pair has the potential of moving lower.

Resistance: 1.1121, 1.1208

Support: 1.1022, 1.0950

XAU/USD (4 Hours)

XAU/USD Under Mild Pressure as US Dollar Gains Favor Amid Encouraging Data

Gold started the week facing mild pressure and remained at the lower end of the previous week’s range, with XAU/USD trading below $1,960 per troy ounce. The US Dollar saw some market favor after mixed yet encouraging data from the United States. S&P Global’s preliminary estimates of the July Purchasing Managers’ Index (PMI) showed a higher-than-expected increase in the Manufacturing PMI, reaching 49, its highest level in three months. However, the Services PMI, though still in expansionary territory, slowed to 52.4 from the previous 54.4. Despite this, US companies indicated continued business activity growth in July, with the service sector leading the expansion. Wall Street remained resilient, disregarding negative cues from international markets, as investors focused on upcoming earnings reports and significant events, including decisions on monetary policy from the US Federal Reserve and the European Central Bank. Furthermore, crucial economic indicators such as the preliminary Q2 Gross Domestic Product (GDP) estimate and the June Personal Consumption Expenditures (PCE) Price Index were also anticipated.

Chart XAUUSD by TradingView

According to technical analysis, the XAU/USD pair moved lower on Monday but then managed to move back higher and try to reach the middle band of the Bollinger Bands. Currently, the price is slightly below the middle band. Additionally, the Relative Strength Index (RSI) is at 48, suggesting that the XAU/USD pair has returned to a neutral stance.

Resistance: $1,971, $1,992

Support: $1,954, $1,941

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.