EUR/USD analysis: dollar's strength intact, 1.1250 up next
|EUR/USD Current price: 1.1338
- Ebbing concerns about Turkey helped equities bounce, but the greenback continues marching north.
- US Retail Sales this Wednesday could support further the greenback.
The dollar kept running, and despite at a slower pace, it still reached fresh yearly highs particularly against high yielding currencies. Data coming from Europe came in mixed, in-line with market's expectations and previous' month readings, but fell short of incentivizing EUR demand. Stocks recovered from Monday's slump, as Turkey-related risk aversion ebbed, but the only difference across the FX board being decreasing demand for the JPY. The dollar is on demand despite the latest gains could be a bit too much, and the risk of a downward corrective movement is now higher. The EUR/USD pierced its previous low and fell to 1.1330, on pure dollar's strength.
Germany and the EU published preliminary Q2 GDP figures, up 0.5% and 0.4% respectively, both slightly above the market's forecast. The ZEW confidence survey indicated that business sentiment improved in August, although the readings held well below average and within negative readings. For Germany, Economic Sentiment resulted at -13.7, improving from the previous -23.7, while for the whole EU, it printed -11.1 vs. the previous -18.7. The US released Export and Import prices for July, both down monthly basis but sharply up when compared to a year earlier. Nevertheless, the market remained indifferent to the figures. Several European markets will be closed this Wednesday with no relevant data to be out from the Union, although the US will release July Retail Sales and some minor employment data. Sales are seen up 0.1% MoM, while the core reading is seen up by 0.3%.
As for the EUR/USD pair, it trades near the mentioned daily low, at levels last seen in July 2017. The 4 hours chart shows that Monday's advance was enough for technical indicators to correct extreme oversold conditions, bringing back sellers. In the mentioned chart, a strongly bearish 20 SMA keeps capping the upside, now around 1.1420, while technical indicators resumed their declines, the RSI now piercing the 30 level, but the Momentum still hesitating within negative levels. A short-term upward corrective movement could come on a recovery above 1.1365, Monday's low and now the immediate resistance, but selling interest will likely reappear on approaches to the 1.1400/20 region.
Support levels: 1.1330 1.1300 1.1260
Resistance levels: 1.1360 1.1390 1.1420
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