The euro was set to close Monday down about 0.13% against the US dollar after reports pointed to a delay in US-Iran talks. In trading, EUR/USD failed to hold above the 100-day Simple Moving Average (SMA) near 1.1568, keeping the pair boxed in as the session progressed.
Technically, the pair remains in consolidation but retains a mild upward bias after moving back above the 50-day SMA, with momentum reinforced by the Relative Strength Index (RSI). Resistance sits first at the 100-day SMA; a break would bring 1.1600 into view and then the 200-day SMA at 1.1629, with 1.1700 next. On the downside, a move below 1.1500 would leave scope for a pullback to the 50-day SMA at 1.1469, followed by 1.1400 and the 28 July swing low at 1.1353.
Fundamental and Technical Backdrop
We are closely watching the EUR/USD as it consolidates near the 100-day Simple Moving Average (SMA) of 1.1568, especially following recent delays in US-Iran geopolitical talks. This diplomatic friction has temporarily bolstered the US Dollar, leading to a minor 0.13% daily loss for the Euro. However, because buyers successfully reclaimed the 50-day SMA, we see a slight upward bias supported by a rising Relative Strength Index.
To back this up, recent Eurostat data shows Eurozone inflation holding steady at 2.2%, while US retail sales figures point to a cooling domestic economy. Meanwhile, treasury yields have softened, with the US 10-year yield dropping toward 3.9%, making the Greenback less attractive. This fundamental backdrop suggests the current consolidation could soon resolve in favor of the bulls as we head into late August.
Trading Strategies and Key Price Levels
For derivative traders, we recommend preparing for a bullish breakout by targeting call options if the pair breaches the immediate resistance at 1.1568. A clean break above this 100-day SMA opens the door to 1.1600, followed closely by the 200-day SMA at 1.1629. Once those levels are cleared, the next logical target for long positions is the 1.1700 psychological barrier.
Conversely, if the Euro fails to hold its ground and slips below 1.1500, we should pivot to defensive put options. This downside move would likely trigger a swift pullback toward the 50-day SMA at 1.1469, followed by the 1.1400 mark. Below that, the July 28 swing low of 1.1353 serves as the next critical support level where buyers might step back in.
