EUR/USD analysis: Bears await a sustained break through the 1.1200 near-term base
|- Dovish ECB expectations continue to weigh on the shared currency.
- The USD gets a goodish lift following Tuesday’s upbeat US retail sales.
- Tempered Fed rate cut bets might now cap any meaningful up-move.
The EUR/USD pair remained under some heavy selling pressure for the second consecutive session and dropped to near one-week lows on Tuesday, challenging 1.1200 handle amid growing speculations that the European Central Bank (ECB) will announce additional monetary stimulus sooner rather than later. Market expectations were reinforced by comments from the Bank of France Head and the ECB Governing Council member Villeroy de Galhau, which coupled with the ZEW survey results - showing that the German Economic Sentiment deteriorated more sharply than expected in July, exerted some additional downward pressure on the shared currency.
The pair extended the previous session's pullback from the 1.1285 region and was further pressurized by resurgent US Dollar demand, which got an additional boost following the release of upbeat June US retail sales figures. The headline and the Core sales recorded a growth of 0.4% in June, while Control Group sales increased by 0.7% - all bettering market estimates. The stronger US data tempered expectations of an aggressive policy easing by the Fed later this July, which was evident from a pickup in the US Treasury bond yields and provided a goodish lift to the greenback.
The bearish pressure now seems to have eased a bit, with the pair gaining some positive traction during the Asian session on Wednesday and ahead of the final Euro-zone CPI figures. Apart from this, the Euro-zone economic docket lacks any major market-moving data and hence, the USD price dynamics might continue to act as a key driver of the pair's momentum. Later during the early North-American session, the release of the US housing market data - building permits and housing starts, might further collaborate towards producing some short-term trading opportunities.
From a technical perspective, the pair remains well within the striking distance of the 1.1195-90 horizontal support, which if broken decisively is likely to set the stage for a further near-term depreciating move towards the 1.1125 intermediate support en-route yearly lows, or closer to the 1.1100 round figure mark. On the flip side, the 1.1220-25 region now seems to act as an immediate resistance, above which the uptick could further get extended towards the 1.1260-70 supply zone. A follow-through buying might negate any near-term bearish bias and lift the pair further beyond the 1.1300 handle towards its next resistance near the 1.1325-30 region.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.