The EUR/USD experienced a calm start to the trading session with no significant economic indicators from the euro area or the US to sway investor sentiment. Consequently, traders turned their attention toward the European Central Bank (ECB) for potential guidance on monetary policy.
Investors focused on the economic outlook and the likelihood of the ECB raising interest rates after the summer. While ECB President Christine Lagarde and Executive Board Members remained committed to controlling inflation, the bank has refrained from confirming a move in September due to its shift towards data-dependent policy decisions. However, persistent wage growth and inflation rates could necessitate further tightening beyond July. Traders kept a close eye on ECB chatter for clues about post-summer policy intentions, though no ECB members were scheduled to speak that day.
Meanwhile, the US economic calendar also presented a quiet day with no significant indicators to impact the EUR/USD later in the day. Consequently, market risk sentiment and sentiments towards both economies and their monetary policies became crucial drivers of the currency pair's movement.
Analyzing the EUR/USD price action, the daily chart showed the pair sliding below the $1.1180 - $1.1221 resistance band to trade below $1.1150. To regain bullish momentum, the pair needed to break above the $1.1150 level to target $1.12. The presence of the 50-day and 200-day Exponential Moving Averages (EMAs) above the price signified a bullish trend in the near and longer term.
Switching to the 4-hourly chart, the EUR/USD was positioned below the $1.1180 - $1.1221 resistance band and $1.1150. The 50-day EMA remained below the price, indicating bearish near-term signals, while the pair held above the 200-day EMA, suggesting a more bullish outlook in the longer term. Traders closely monitored the 50-day EMA's movement relative to the 200-day EMA for potential signals of a fall below $1.11 and a shift toward the $1.1060 - $1.1015 support band.
For Forex traders, the lack of significant economic indicators in the EUR/USD market on July 21, 2023, kept investors cautious. Without clear signals from economic data, market sentiment, and central bank communications played a critical role in shaping currency movements. The focus on the ECB's stance on inflation and potential interest rate hikes added uncertainty to the market, prompting traders to closely monitor news and statements from ECB officials.
In the absence of key economic indicators, Forex traders paid special attention to the EUR/USD price action. The bullish signals on the daily chart, driven by the pair's position above the 50-day and 200-day EMAs, indicated potential upward momentum. However, the 4-hourly chart provided contrasting signals, with the 50-day EMA signaling a bearish outlook in the near term. Traders watched for a break below $1.1150, which could pave the way for further declines toward the $1.1060 - $1.1015 support band. As always, traders must remain vigilant and adapt their strategies based on the latest developments and data in the Forex market.