The EUR/USD pair is experiencing a downward trend and is on track to record losses for the sixth consecutive week. The drop in spot prices to a two-month low indicates the potential for further depreciation, especially as it falls below the significant 200-day Simple Moving Average. The negative sentiment surrounding the pair is fueled by the hawkish comments from Federal Reserve officials, which suggest the possibility of another interest rate increase and strengthen the US Dollar. Additionally, speculations that the European Central Bank will cease its streak of rate hikes contribute to the bearish tone surrounding the EUR/USD pair.
From a technical standpoint, the breach of the 200-day SMA serves as a trigger for bearish traders and supports the continuation of the pair’s descending trend. However, caution is advised due to the Relative Strength Index’s proximity to entering oversold territory. The upcoming speeches by Fed Chair Jerome Powell and ECB President Christine Lagarde at the Jackson Hole Symposium will be closely watched for potential impact on the pair’s trajectory. Despite this, the overall fundamental backdrop suggests that the EUR/USD pair is likely to continue its downward movement.
In terms of potential levels to watch, a convincing break below the 200-day SMA adds validity to the negative outlook and could lead to a further decline towards the support levels around 1.0750-1.0745 and the round-figure mark of 1.0700. On the other hand, any intraday recovery above the 1.0800 mark may be seen as an opportunity to sell, with resistance expected near the 1.0840 region and the supply zone of 1.0870-1.0875. If these resistance levels are successfully surpassed, it could invalidate the bearish outlook and open the possibility of testing the 1.0900 round-figure mark and the resistance zone of 1.0915-1.0920.