Today we would return to the EUR/USD currency pair, since quite a lot has happened since Monday and the relevant levels for the pair have been updated.
As we explained on Monday, right now the European single currency is under pressure because of the developing financial problems in Turkey. The country is struggling with extremely high inflation and Turkish banks are unable to keep dollar reserves. Normally the central bank of Turkey will hike interest rates in order to stabilize the lira, but President Erdogan would not allow it. Still, on Tuesday the central bank took other measures to curb liquidity, which helped a little. Right now the Turkish lira is doing better than it was at the beginning of the week, but the future is still unclear. European banks are exposed to risks from Turkey, which is why the EUR has been suffering. Though economic data from the eurozone is not bad per se, it is not strong enough to dispel the pressures.
The American dollar is stable. Fundamental data from the United States remains positive and we are getting closer to an expected interest rate increase in September. Moreover, the current high risk climate on the financial markets is pushing investors towards the dollar, which also serves as a boost for the reserve currency. Today we expect the building permits and housing contracts statistics for July in the US.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1334. We expect the EUR/USD to continue declining, so pay attention to the nearby support levels at 1.1311 and 1.1276. The daily resistances are located at 1.1369 and 1.1392, but we do not expect the pair to touch them today. The indicators of technical analysis and moving averages agree on a strong sell recommendation.
