EUR/USD tests key technical support as dollar keeps firmer to start the session

<p>In turn, this is pushing EUR/USD slightly lower on the day as the tight range earlier expands a little. The pair is now down to a low of 1.0916 and is testing key technical support from its 100-day moving average (red line) at 1.0915. Keep in mind that there are also <a href="https://www.forexlive.com/Orders/fx-option-expiries-for-3-august-10am-new-york-cut-20230803/" target="_blank" rel="follow">large option expiries</a> in play for the pair at the 1.0900-20 region today.</p><p>As such, that could keep price action just above the 1.0900 mark before the expiries roll off but it would highly depend on broader market sentiment as well.</p><p>If the selling in bonds and equities pick up, that is likely to exacerbate dollar gains on the day – especially if we see a stronger sense of risk aversion i.e. the earlier selling turning into a real rout in markets.</p><p>Looking at the technicals, a drop below the 100-day moving average will put sellers in a more prominent position in searching for further downside towards 1.0800 next.</p><p>The euro's struggles are not helped by the fact that economic conditions are worsening alongside a looming credit crunch. And when you add in the ECB also potentially erring towards a pause in September, the supposed divergence to the Fed is no longer existing too. This was something I mentioned last week <a href="https://www.forexlive.com/news/the-fed-and-ecb-have-more-in-common-than-you-would-think-20230727/" target="_blank" rel="follow">here</a>.</p>

This article was written by Justin Low at www.forexlive.com.