EUR/USD Falls Towards Multi-Week Lows Due to Powell Tensions and Expectation of US Data
EUR/USD currency pair continued its bearish trend on Thursday, reaching three-week lows at 1.1565 as investors prepared for a critical U.S. economic data and processed political tensions in Washington. Increased speculation surrounding the resignation of Fed Chair Jerome Powell, following remarks from President Trump, prompted safe-haven flows into the U.S. Dollar. In the meantime, Eurozone inflation figures came as expected and did little to support the Euro. Market attention now turns to U.S. Retail Sales and Jobless Claims, due to influence the monetary policy of the Fed and the short-term path of the EUR/USD pair. KEY LOOKOUTS • Future data might significantly impact Fed rate expectations and USD health. Strength could validate the “higher for longer” rate positioning. • Ongoing ambiguity regarding Fed Chair Powell’s role is contributing to uncertainty and fueling Dollar safe-haven demand. • The pair is probing important support at 1.1565; a drop below can be expected to spark a move towards 1.1535 or even lower. • Last inflation data equaling expectations can provide minimal reprieve for the Euro while bearish momentum persists. The EUR/USD pair is under sustained selling pressure, nearing three-week lows as traders react to political drama in the U.S. and await key economic indicators. Market sentiment was shaken after speculation surfaced regarding Fed Chair Jerome Powell’s possible resignation, following criticism from President Trump. Although later denied, the mere suggestion intensified demand for the safe-haven U.S. Dollar. In the meantime, Eurozone CPI data reinforced initial inflation estimates with little supportive value to the Euro. With the strengthening Dollar, the next market moves are dependent on subsequent U.S. Retail Sales and Jobless Claims data, which will help further define the Fed’s monetary policy path. EUR/USD keeps falling, nearing multi-week lows on political tensions and before pivotal U.S. data releases. Speculation surrounding Fed Chairman Powell’s role and robust safe-haven appetite for the Dollar weigh on the Euro. Market players now expect U.S. Retail Sales and Jobless Claims for guidance. • EUR/USD falls close to 1.1565, a three-week low as bearish momentum picks up pace. • Haven demand supports the US Dollar as markets respond to political turmoil in Washington. • Speculation about Fed Chair Powell quitting leads to volatility, but later refuted by the Fed. • Eurozone CPI figures reaffirm preliminary estimates, with 2% YoY inflation and minimal effect on the Euro. • US Retail Sales to increase 0.1%, with Jobless Claims anticipated to climb to 235K. • Technicals indicate EUR/USD at critical support, with downside possible to 1.1535 if broken. • Traders carefully monitor U.S. data for signals about Fed’s rate trajectory and short-term USD firmness. The EUR/USD currency pair is under pressure as overall market sentiment turns against the Euro on increased political tension and upcoming economic releases. Investor attention shifted to speculation regarding Federal Reserve Chair Jerome Powell’s future after President Trump made divisive comments implying he’d rather have Powell resign. While the White House later stated that Powell would not be removed, the comments were enough to spook markets and move towards safer assets such as the Dollar. EUR/USD DAILY PRICE CHART SOURCE: TradingView On the European side, the Euro gained little support from the final inflation readings, which reinforced a continued increase in consumer prices within the Eurozone. The Consumer Price Index (CPI) indicated that inflation hit the European Central Bank’s 2% threshold, and core inflation remained solid. This was insufficient, though, to give the Euro much traction as market participants were more interested in the U.S. economic forecast and politics. Consequently, the Dollar still gains from its safe-haven status in times of uncertainty. TECHNICAL ANALYSIS EUR/USD is hovering around a vital support level between 1.1570 and 1.1565, which is the lower end of a falling channel that was formed in early July. The pair is showing sustained bearish momentum with the 4-hour RSI in a declining trend but not yet in overbought levels, suggesting scope for further decline. A clean break beneath 1.1565 would expose the way to the next significant support at 1.1535, the 78.6% Fibonacci retracement of the June bullish run. On the higher side, any bounce would be resisted by the former support area around 1.1655, followed by the upper boundary of the channel at around 1.1680. FORECAST If EUR/USD is able to stay above the critical support at 1.1565 and is supported by weaker-than-anticipated U.S. economic indicators, short-term recovery is possible. In such a scenario, the pair can try to make its way towards the immediate resistance at 1.1655, coinciding with the earlier support region. Breaking above the level may lead to further rally towards 1.1680, with scope to probe the psychological level around 1.1700 if bulls gain traction. Conversely, a clean break beneath the 1.1565 level would most likely affirm the resumption of the larger downtrend. This would move EUR/USD further to the downside toward the 78.6% Fibonacci retracement value at 1.1535. Should selling continue unabated, the pair would continue lower toward the June lows at 1.1455. Ongoing U.S. Dollar strength and geopolitical risk would justify this bearish outlook.