The Bearish Momentum is Getting

The price of the EUR/USD currency pair has now declined, to trade several levels below the 100-hour moving average line. 

• The stability of the price of the EUR/USD currency pair remains below the 1.1000 level, which supports more bears’ control over the trend.
• As I mentioned since the start of trading this week, the EUR/USD currency pair may remain under downward pressure until the reaction to the announcement of US job numbers by the end of the week.
• This week, which will have a strong and direct reaction to the future of raising US interest rates.

According to the ADP survey, employment change in the United States for the month of July outperformed the expected number of 189,000 jobs by 324,000. Prior to that, the ISM Manufacturing PMI for July missed expectations at 46.8 with a reading of 46.4. The ISM Manufacturing Employment Index and Prices Paid fell below expectations by 48 and 42.8, respectively, with readings of 44.4 and 42.6 respectively. The ISM New Manufacturing Orders Index beat expectations by 44 with a reading of 47.3. US job openings in JOLTS for June missed the estimated number of 9.62 million by 9.582 million.

In the European Union, Germany’s unemployment rate change for June beat expectations at 15k with a change of -4k, down from 28k in the previous period. The seasonally adjusted employment rate for June also fell to 5.6% down from 5.7% in May and outpacing the estimated 5.7%, while the HCOB Manufacturing PMI for July matched expectations at 38.8, in line with estimates. The EU unemployment rate for June surpassed the estimated rate of 6.5% at a rate of 6.4%, unchanged from May.

On the other hand, left an impact on the sentiment of investors and markets. Fitch downgraded the US government, citing growing debt at the federal, state, and local levels and a “continued deterioration in governance standards” over the past two decades. Accordingly, the rating on Tuesday was downgraded one notch to AA+ from AAA, the highest rating possible. And the new rating is still very good in investment grade. The decision illustrates one way in which increasing political polarization and Washington’s repeated confrontation over spending and taxes can hurt American taxpayers. A lower credit rating can, over time, increase borrowing costs for the US government.

It is only the second time in the country’s history that the credit rating has been downgraded. In 2011, the rating agency Standard & Poor’s stripped the US of its AAA rating after a protracted battle over the government’s borrowing limit. The Government Accountability Office, in a 2012 report, estimated that standoffs in the 2011 budget raised Treasury borrowing costs by $1.3 billion that year.

The price of the EUR/USD currency pair has now declined, to trade several levels below the 100-hour moving average line. However, the late rebound on Wednesday helped the currency pair recover from the oversold levels of the 14-hour RSI and return to normal trading territory. In the near term, according to the performance on the hourly chart, it appears that the EUR/USD is trading within a bearish channel formation. This indicates a significant short-term bearish bias in market sentiment. Therefore, the bears will be looking to ride the current wave of declines toward support at 1.0926 or below the support at 1.0900. On the other hand, the bulls – bulls – will be looking for a bounce around 1.0961 or higher at 1.0981 resistance.

In the long run, and according to the performance on the daily chart, it appears that the EUR/USD is trading within forming a sharp descending channel. This indicates a strong long-term bearish bias in market sentiment. Therefore, the bears will target extended declines around 1.0854 or below at the 1.0767 support. On the other hand, the bulls will target long-term profits at around 1.1042 or higher at the resistance at 1.1123.

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