Following breaching the August beginning range, the EUR/USD exchange rate may likely reverse the slide from the high of 1.0485 of the previous month as the US Consumer Price Index (CPI) slowing raises concerns about the next 75bp Federal Reserve rate increase.
The failure of latest price movement to continue the string of higher highs and lows from earlier this week increases the likelihood for a short-term retracement in the EUR/USD, and it is unclear whether the Federal Open Market Committee (FOMC) will change its stance at the upcoming interest rate ruling on September 21 given that the central bank is scheduled to modify the SEP figures.
Resistance is found around the low of May. However, if it does not stay over the 50-Day SMA, the exchange rate may replicate the price action from June, which was equivalent to 1.0328.
As the moving average remains to indicate a downward slope, the rise from the annual low of 0.9952 may end up being an adjustment in the wider pattern; however, yet another gain in the EUR/USD may feed the radical shift in consumer sentiment similar to the conduct seen earlier during 2022.
49.15% of traders are currently net long EUR/USD, as per the IG Client Sentiment survey. The number of traders who are net-long is up 3.96% from Thursday and down 10.46% from the week before, whereas the percentage of traders who are net-short is up 3.22% from and 17.42%, with respect to the aforementioned timeframe. Although the EUR/USD is still trading close to its monthly high of 1.0369, the fall in net-long positions coincides with a change in consumer sentiment. During the first days of the week, 51.34% of traders were net-long on the EUR/USD.
Despite this, as the EUR/USD is unable to maintain the string of stronger highs and lows, the exchange rate may likely react to the previous support area around the May low as mentioned previously. This is because prospects for an additional 75 bp rate increase are dwindling.