The EUR/USD currency pair has experienced selling pressure for the second consecutive day on Friday, dropping to its lowest level since June 14 during the Asian trading session. The current spot exchange rate is around 1.0785-1.0780, reflecting a decline of 0.25% today, and it is likely to end in the red for the sixth week in a row.

Hawkish statements from Federal Reserve (Fed) officials yesterday have kept the door open for a potential 25 basis points interest rate hike later this year, pushing the US Dollar (USD) to its highest level in over two months.

Additionally, speculation that the European Central Bank (ECB) will halt its series of nine consecutive interest rate hikes in September has weakened the Euro, contributing to the selling pressure on the EUR/USD pair.

From a technical perspective, the downward trend has caused spot prices to fall below the 200-day Simple Moving Average (SMA) for the first time since November 2022. This could act as a new trigger for bearish traders, strengthening the likelihood that the EUR/USD pair will continue its downward trend from its peak around 17 months ago, approximately 1.1275 on July 18.

However, the Relative Strength Index (RSI) is on the brink of breaking into oversold territory. This, in turn, necessitates caution ahead of the speech by Federal Reserve Chairman Jerome Powell on Friday and European Central Bank President Christine Lagarde's statement on Saturday during the Jackson Hole Symposium. Nonetheless, the underlying fundamentals indicate that the path of least resistance for the EUR/USD pair is to the downside.

Moreover, strong penetration and acceptance below the technically significant 200-day SMA increases confidence in a less positive outlook. Therefore, further declines toward the next relevant support level around 1.0750-1.0745, with the aim of reaching the round number of 1.0700, seem increasingly likely. Additional selling could potentially open the way to test the lowest levels of the upward pattern from May 2023, which is around the 1.0635 region.

On the other hand, any intraday recovery that brings the value back above the round number of 1.0800 is likely to be viewed as a selling opportunity, with gains expected to be capped near the 1.0840 range. This would be followed by a supply zone around 1.0870-1.0875. If this zone is firmly breached, the bearish outlook may be diminished. The EUR/USD pair could then potentially move towards the round number of 1.0900 and face resistance in the vicinity of 1.0915-1.0920.

Warning!

This analysis is based on fundamental and technical perspectives from trusted sources and should not be considered as advice or solicitation. Always remember that this content aims to enrich the reader's information. Always conduct your own independent research regarding other forex information as a reference for your trading.

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