Euro attempts some consolidation around 1.1230 as Dollar rebounds.

Euro holds above 1.1200 against the US Dollar.Stocks in Europe opened on a positive foot on Wednesday..EUR/USD bounces off earlier lows in the sub-1.1200 yardstick.The Euro (EUR) manages to stage a recovery after initially dropping against the US Dollar (USD), allowing EUR/USD to climb back above 1.1200 amid an overall risk-off market environment.

The strengthening dollar, as evidenced by the Dollar Index (DXY) retaking the 100.00 level to hit multi-day highs around 100.30, favours the pair’s lack of direction. This comes alongside falling US bond yields across the board and new lows for German bund yields, suggesting rising demand for safe havens.

Looking ahead, though the Fed is perceived as nearing the end of its tightening cycle, the broad view of another 25 basis points (bps) interest-rate hike in July could keep the dollar supported.Meanwhile, a rate increase by the European Central Bank (ECB) later this month is widely anticipated, but ECB officials have sounded less hawkish recently on the prospects of additional hikes beyond summer, hinting more consensus may be needed for that.

Data-wise in the region, the Eurozone final inflation data for June showed headline inflation at 5.5% YoY and core inflation at 5.5% YoYIn the US, Mortgage Applications and Housing Starts/Building Permits data will be in focus.Daily digest market movers: Euro bounces off lows below 1.1200

The EUR rebounds from the sub-1.1200 area against the USD.The USD Index picks up pace and surpasses the 100.00 hurdle.

Technical Analysis: Euro appears supported around 1.1200

Price action in EUR/USD pair hints at the idea that further gains might be in store in the short-term horizon. OnThe pair printed a new 2023 high at 1.1275 on July 18. Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 recorded on February 10.

On the downside, the 1.1000 region emerges as a psychological support seconded by provisional support at the 55-day and 100-day SMAs at 1.0893 and 1.0871, respectively, ahead of the July 6 low of 1.0833. The breakdown of this region should meet the next contention area at the key 200-day SMA at 1.0674 prior to the May 31 low of 1.0635. South from here emerges the March 15 low of 1.0516 before the 2023 low of 1.0481 on January 6.

Furthermore, the constructive view of EUR/USD appears unchanged as long as the pair trades above the key 200-day SMA.However, the current pair’s overbought condition, as per the daily Relative Strength Index (RSI) near 75, carries the potential to spark a technical correction in the short-term horizon.

EURO FAQS

What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.

EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

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