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market analysis
In the key battle between the Euro 1.17, can the bulls take advantage of the victory?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: In the key battle of the Euro 1.17, can the bulls take advantage of the victory?" Hope it will be helpful to you! The original content is as follows:
On Monday (July 21), the euro-dollar exchange rate continued to rebound, and trading around 1.1660 during the North American period. U.S. Treasury yields continue to fall, and the dollar weakened under pressure, bringing a boost to the euro. Meanwhile, a corporate financing survey released by the European Central Bank (ECB) shows that European xm-links.companies are optimistic about the economic outlook, but are still cautious about the uncertainty of trade negotiations between Europe and the United States. US President Trump reiterated the deadline for tariff negotiations on August 1, and the EU is also preparing to respond, and the fluctuations in market risk appetite have intensified.
Fundamentals
In terms of fundamentals, the euro benefited from a pullback in the US dollar and a lower U.S. Treasury yield. The 10-year U.S. Treasury yield fell below 4.40%, a nearly ten-day low, weakening the recent rally accumulated by the US dollar. In the United States, although the University of Michigan's consumer confidence index rose slightly from 60.7 to 61.8 last week, higher than the 61.5 forecast, boosting the US dollar in the short term, the corporate earnings season is about to be unveiled, and financial reports such as technology giants Alphabet (GOOG), Tesla (TSLA), defense giants Lockheed Martin (LMT), General Dynamics (GD) will dominate market sentiment.
In Europe, the ECB will announce its interest rate resolution on Thursday, which is expected to keep interest rates unchanged, but President Lagarde's xm-links.comments on the economic outlook and tariff issues will provide key guidance on the short-term trend of the euro. In addition, the US Treasury Secretary publicly called on the president to avoid replacing Federal Reserve Chairman Powell, showing a high emphasis on economic stability within the country.
Technical:
From the daily K-line chart, the euro is currently operating near the middle rail of the Bollinger Band. The middle rail of the Bollinger Band (1.1655) forms a short-term support, and the upper rail is at 1.1851.The lower track is 1.1460. The exchange rate started an upward trend from the low point of 1.0732, but showed signs of a retracement after hitting the high point of 1.1829. Analysts believe that if the 1.17 area is effectively broken through, it is expected to challenge the high point of the year again.
MACD indicator shows that the DIFF line (0.0030) is slightly higher than the DEA line (0.0054), and the MACD bar chart is in the negative value zone, but the narrowing trend is obvious, implying that the bear's momentum is weakened. If a gold cross signal appears, it is expected to usher in a technical rebound.
The RSI indicator is around 54.43 and is far from entering the overbought zone (above 70), indicating that the exchange rate has a neutral and long-term momentum after experiencing the previous rise. Overall, the analysis believes that the short-term upward trend of the euro remains intact, but we need to pay attention to the breakthrough confirmation around 1.17. If it is blocked and falls back, the 1.1460 (Bollinger's lower track) below will become an important support.
Prevention of Market Sentiment
Current market sentiment tends to be cautiously optimistic. The improvement in corporate confidence in the euro zone and the decline in the dollar have provided a phased boost to the euro. However, the uncertainty of tariff negotiations in Europe and the United States, especially the August 1 deadline set by Trump, casts a shadow on market sentiment. Traders generally look forward to this week's EuroBank Conference and Lagarde's speech to assess the mid-term outlook for the euro. Although the U.S. dollar benefited from strong employment and consumption data last week, analysts believe that if trade uncertainty in the future increases, it may trigger profit-taking of long U.S. dollars, which will boost the euro.
Future Outlook
Bolster Outlook:
Analysts believe that if the euro breaks through the resistance around 1.17 against the US dollar, the short-term is expected to open upward space to 1.1829 and 1.1851; in the medium term, if the ECB is more erratic and the European and Americans reach a tariff agreement, the euro may enter a new round of bullish market, and the target is towards the 1.20 psychological threshold.
Bell prospect:
Analysts believe that if the euro fails to break through the 1.17 area, or is affected by the breakdown of European and American tariff negotiations and strong US economic data, the exchange rate may be backtested at the lower track of 1.1460 Bollinger. Further loss will test the previous platform 1.1360; in the long run, if the United States maintains high interest rates and has a soft economic landing, the US dollar will still have support, and the euro will find it difficult to strengthen significantly.
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