Current trend

The EUR/USD pair shows quite active decline, correcting after a rise the day before. The instrument is testing 1.0685 for a breakdown, while investors await the publication of June inflation statistics in France, Spain and Italy. Forecasts suggest a slowdown in the Consumer Price Index in France from 2.6% to 2.5%, and in Spain from 3.6% to 3.3%, while in Italy the figure could accelerate from 0.8% to 1.0%, significantly influencing future decisions of the European Central Bank (ECB). At the last meeting, the regulator cut the interest rate by 25 basis points, while the Bank of England and the US Federal Reserve are keeping borrowing costs at the same levels.

The day before, the single currency was slightly supported by May statistics on the dynamics of Private Loans in the eurozone, which reflected an increase in the indicator from 0.2% to 0.3%. Meanwhile, the Economic Sentiment index fell from 96.0 points to 95.9 points in June, contrary to expectations of 96.2 points, and the level of Consumer Confidence, as expected, remained at –14.0 points.

With the opening of the American session, the market's focus shifted to data from the United States: the Department of Commerce raised its estimate of Gross Domestic Product for the first quarter from 1.3% to 1.4%, and the dynamics of Nondefense Capital Goods Orders excluding Aircraft sharply fell 0.6% in May after rising 0.2% in the previous month.

Today, the focus of investors' attention will be on the key inflation indicator for the US Federal Reserve — the Personal Consumption Expenditures - Price Index. The Core rate is forecast to slow down from 2.8% to 2.6% YoY and from 0.2% to 0.1% MoM. Reducing inflation risks in the country may allow the regulator to implement plans to ease monetary policy: officials expect that the interest rate in 2024 may be reduced from 5.50% to 5.10%.

Support and resistance

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is expanding from below, being spacious enough for the current activity level in the market. MACD is declining keeping a weak sell signal (located below the signal line) Stochastic shows similar dynamics, gradually approaching the level of "20" and signaling the risks of the single currency being oversold in the ultra-short term.

Resistance levels: 1.0700, 1.0730, 1.0765, 1.0800.

Support levels: 1.0665, 1.0630, 1.0600, 1.0561.

Trading tips

Short positions may be opened after a breakdown of 1.0665 with the target at 1.0600. Stop-loss — 1.0700. Implementation time: 1-2 days.

A rebound from 1.0665 as from support followed by a breakout of 1.0700 may become a signal for opening new long positions with the target at 1.0765. Stop-loss — 1.0665.