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Today's EURUSD analysis in the Asian session shows stable movement within a very narrow trading range, consolidating the recovery of the past two days.
This recovery began after the currency pair hit its lowest point this year, in the mid-1.0400s, earlier this week. Currently, EUR/USD is trading slightly below 1.0550, with little change today as traders await the release of the US monthly employment report, known as the NFP.
Ahead of this key data, prospects of further tightening remain a factor supporting higher US Treasury yields and driving the US Dollar (USD).
In addition, the generally weaker equity market sentiment seems to favor the USD as a safe haven. These factors, along with expectations that the European Central Bank (ECB) may not raise interest rates soon, are limiting the EUR/USD pair.
From a technical analysis perspective, the recent decline from the 17-month highs reached in June has occurred within a downtrend channel, reflecting an established bearish trend.
Furthermore, the Relative Strength Index (RSI) on the daily chart has recovered from oversold conditions. Therefore, any further rise will likely be viewed as an opportunity to open new bearish positions in EUR/USD, with a risk of failure in the short term.
A weaker-than-expected US employment report could spark a rally in spot prices beyond the psychological level of 1.0600. While momentum may continue, it is likely to remain capped around the upper boundary of the aforementioned channel, currently around the mid-1.0600s.
This level will serve as a key marker, and a break above it would indicate that EUR/USD has found a near-term bottom and shift the bias towards buyers.
On the downside, the psychological level of 1.0500 appears to act as a support level. A continued sell-off could push spot prices toward a new yearly low, testing the channel's support around 1.0420-1.0415.
A decisive break below this level would signal a new phase for bearish traders and open the door for an extended decline in EUR/USD, which has already lasted nearly three months.
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Warning!
This analysis is based on fundamental and technical views from reliable sources and is not intended as advice or solicitation. The content is for informational purposes only. Always conduct independent research on forex information before making trading decisions.
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