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For the third successive day, EUR/USD investing faced resistance at the 1.0900 level, unable to sustain gains despite an initial surge during the US session. However, Dollar strength prevailed, causing the pair to retreat and trade at 1.0872 at present.

To change the prevailing momentum, the 100-day Moving Average (MA) remains a crucial factor. A breach of this level could potentially trigger a shift in market sentiment.

EUR/USD Left Vulnerable to Sentiment and Dollar Index (DXY)

With a lack of significant upcoming data, EUR/USD finds itself at the mercy of overall market sentiment and movements in the Dollar Index (DXY). Traders are advised to keep a close watch on these factors to gauge the pair’s potential trajectory.

Despite the Dollar’s gains, concerns of potential intervention by Japanese authorities loom as the currency’s rally against the yen continues.

US Data Highlights and Risk Assets

US data revealed a slight decline of 11,000 in initial jobless claims, with figures standing at 239,000, following a revised print of 250,000 in the previous week. The Philly Manufacturing Business Outlook surpassed expectations, indicating improvements in general activity, new orders, and shipments. However, the positive data failed to halt the Dollar’s slide.

Decline As the US session progressed, a return of Dollar strength coincided with a decline in risk assets. Although EUR swap rates maintained slight positivity for the day, the shifting sentiment has consistently provided some support to the US Dollar whenever the Euro appears poised for a rebound.

DXY’s Position and Jackson Hole Symposium

The Dollar Index (DXY) remains below the long-term descending trendline, which holds significance as the Jackson Hole Symposium approaches next week. The potential for surprises from the Federal Reserve (Fed) during this event could impact market sentiment and the Dollar’s performance.

Looking ahead, the upcoming week holds relatively few significant risk events for the US, leading up to the Jackson Hole Symposium. Attention may shift to the Eurozone, with the Euro Area inflation final number expected to influence 100 EUR to USD volatility.

EUR/USD’s Ongoing Decline and Market Sentiment

EUR/USD’s continuous decline widens the gap from the 1.0900 mark. Market sentiment influenced by the Federal Reserve (Fed) meeting minutes and concerns over China’s economic slowdown are contributing factors.

The Federal Reserve (Fed) meeting minutes and China’s economic slowdown have weighed on EUR/USD. Positive US data and the EU trade balance have offered limited support to the pair.

Global Market Sentiment and Central Banks’ Tightening

Global market sentiment remains cautious, with declining equities and rising bond yields. Investors anticipate further monetary tightening by central banks, contributing to the subdued sentiment.

The Fed minutes for July revealed a unanimous decision for a rate hike. Yet, board members expressed caution about potential over-tightening. While policymakers foresee upside inflation risks, they adopt a cautious approach to monetary policy, considering various data factors.

US Data: Initial Jobless Claims and Philly Fed Manufacturing Index

US data featured initial jobless claims slightly better than expected at 239,000 and a strong Philadelphia Fed Manufacturing Index for August. These data points, while positive, have not fully reversed the Dollar’s decline.

Data The Eurozone reported a trade surplus of €23 billion, surpassing expectations. Upcoming Harmonized Index of Consumer Prices (HICP) data for July is anticipated to impact the best euro buyback rates, depending on the extent of change from preliminary numbers.

Euro Forecast for Next Week: Technical Analysis

EUR/USD investing’s technical analysis suggests a potential test of the July 6 daily low of 1.0833. If bearish sentiment persists, the 1.0800 figure and the 200-day Moving Average (DMA) at 1.0787 could come into play. Conversely, resistance levels lie at 1.0900 and the 50-DMA at 1.0974.

For a deeper understanding of price action, chart patterns, and moving averages, traders are encouraged to explore the educational resources available in the DailyFX Education Section.

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