Current dynamics

During the Asian session, the EUR/USD pair is moving away from the resistance line of the rising channel at 1.0960-1.0710, remaining around 1.0889.

The European Central Bank (ECB) intends to keep interest rates tight until inflation returns to the 2.0% target after cutting them in June for the first time since 2019: the interest rate on main refinancing operations is currently set at 4.25%. loan rate 4.50% and deposit rate 3.75%. The head of the regulator, Christine Lagarde, said that the economic recovery in the region would likely slow down in the second quarter due to weak investment activity combined with insufficient production growth. She also emphasized that further steps by the monetary authorities will be based solely on macroeconomic statistics. According to her, officials are currently analyzing three key elements underlying their inflation forecast: wage growth, corporate profits and the services sector. At the same time, Lagarde admitted that an additional risk to the acceleration of the consumer price index may arise in the event of an escalation of geopolitical conflicts, which could lead to an increase in energy and goods transport prices. Nevertheless, if the statistics confirm the ongoing deflationary process, it will strengthen the belief of ECB representatives about returning to the target level of 2.0% at the end of 2025. In this context, markets expect two more adjustments in credit costs this year, and with a probability of about 80.0% the first of them will occur in two months.

US gross domestic product (GMT) will be released on Thursday at 2.30pm (GMT 2): it is expected to rise from 1.4% to 1.9% in the second quarter, while the Fed's key core price index for spending for personal consumption in June will be adjusted from 0.0% to 0.1% month-on-month and from 2.6% to 2.5% year-on-year. The base reading can change from 0.1% to 0.2% and from 2.6% to 2.5% respectively. If inflation continues to slow, regulators could start cutting the interest rate at its September meeting, cutting it by 25 basis points.

Support and resistance levels

On the daily chart, the EUR/USD pair continues its correction, once again moving away from the resistance line of the ascending channel with dynamic limits of 1.0960–1.0710.

Technical indicators have started to weaken the buy signal: the fast EMAs on the Alligator indicator are again approaching the signal line, narrowing the swing range, and the AO histogram is forming new bearish bars, falling in the buy zone.

Support levels: 1.0860, 1.0760.

Resistance levels: 1.0940, 1.1060.

Trading scenarios

In the event of a continuation of the decline in the asset and a determination below the support level of 1.0860, sell positions with a target of 1.0760 will be valid. Stop-loss - 1.0920. Delivery time: 7 days and more.

In the event of a retreat and continued growth of the asset, as well as a stop above the resistance level of 1.0940, buy positions with a target of 1.1060 will be valid. Stop-loss - 1.0880.