EUR/USD Technical Analysis: The Bearish Shift Continues

Over the same period of time, the return of the currency pair toward the resistance level of 1.1250 will be important for the bulls to gain control again. 

• Amidst a downward correction, the price of the EUR/USD receives the monetary policy decisions of both the European Central Bank and the US Federal Reserve this week.
• The losses of the downward correction from last week reached the support level of 1.1108, before settling around the level of 1.1130 at the time of writing.
• Expectations indicate that each of the two banks will raise interest rates by a quarter of a point this week, but there will be strong monitoring of the content of each bank’s policy statement to identify the future of the next raising times or stop so that an expected economic recession does not occur on a large scale in the event that the banks continue in the path of tightening for long periods.

It is widely expected that the US Federal Reserve will raise the federal funds rate next Wednesday to its highest level since 2001. Investors are hoping that this will be the final increase of the tightening cycle because inflation has started to subside since last summer. And the federal funds rate in 2022 started at almost zero.

This week, markets are also watching the outcome of a major political meeting in China that could lead to more measures to support slowing growth in the world’s second-largest economy. By the end of the week, the Personal Consumer Expenditure Price Index, a measure of US inflation closely watched by the Federal Reserve, has been declining for the past few months. The Fed has been raising interest rates for more than a year to tame inflation. Wall Street markets are betting that the US central bank will raise interest rates again this year, then stop.

According to the performance on the daily chart below, the price of the EUR/USD is witnessing a stage of breaking the general trend to the downside, and the shift will be strengthened if the currency pair moves below the psychological level at 1.1000, the boundary between the two directions.

Over the same period of time, the return of the currency pair toward the resistance level of 1.1250 will be important for the bulls to gain control again. Today, the price of the EUR/USD will interact with the announcement of the readings of purchasing managers’ indicators for the manufacturing and service sectors of the economies of the eurozone and the United States, and what will be expected regarding the policies of central banks.

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