Markets Analysis

U.S. dollar strengthens despite downgrade of U.S. Treasuries; EURUSD falls sharply【August 3, 2023】

August 03, 2023

Markets Analysis

Fundamental Analysis

  • Rating Agency Fitch Downgrades U.S. Treasury Ratings; Stocks Slump
  • U.S. ADP Employment Report Surpasses Market Expectations, Suggests Labor Market Strength
  • Treasury Secretary Yellen objects to downgrade of U.S. Treasuries

EURUSD Technical Analysis

Analyze the daily chart of the EURUSD. The downtrend had been continuing since mid-July, but the most recent low was renewed yesterday, which triggered a downtrend according to the Dow Theory.
It signified the end of the uptrend and pushed the market back within the range again. From a larger perspective, the market is above the major uptrend line, so a rebound is possible. However, the downgrade of the U.S. debt rating has strengthened the dollar due to increased demand for safe assets, which will continue to put downward pressure on the EURUSD.

[EURUSD / D1]

Day Trading Strategy (Hourly)

Analyzing the 1-hour time frame, the EURUSD is in a gradual decline and a declining channel can be drawn. At the time of writing, the dollar is in an all-around strong market and is likely to fall. Therefore, a return selling strategy seems to be a good idea for the EURUSD as well. The upper line of the declining channel is for selling on the upside, and the lower line of the channel is for buying back in.

The near-term downside target is USD 1.085, which is a major daily support band, and we would like to close positions in front of it.

Support and Resistance Lines

The resistance line to be considered in the future is as follows

1.10 USD – Round number
1.085 USD – Daily support zone

[EURUSD / H1]

Market Sentiment

EURUSD Sell: 37% Buy: 63%

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
U.K. Policy Rate Announcement20:00
U.S. unemployment insurance applications21:30
U.S. ISM Non-Manufacturing Index23:00

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.

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