EUR/USD Analysis: ECB’s “significant” stimulus weighed on the EUR
|EUR/USD Current Price: 1.1108
- ECB’s Rehn said that policymakers need an impactful policy package in September.
- US Retail Sales more than double expectations in July, up by 0.7%.
- EUR/USD broke below a critical Fibonacci level at 1.1110, at risk of re-testing yearly lows.
The EUR/USD pair fell to a fresh 2-week low of 1.1091, as US data surprised to the upside, while ECB’s Rehn spoke about “significant” stimulus needed. US Retail Sales rose by 0.7% in July, more than doubling the 0.3% advance anticipated. The core reading, Retail Sales Control Group, printed 1.0% against the 0.3% expected. Also, the NY Empire State Manufacturing Index for August resulted at 4.8, while the Philly Manufacturing Survey for the same period rose to 16.8, both surpassing the market’s forecast. On a down note, Initial Jobless Claims for the week ended August 9, came in at 220K worse than the expected 214K, while Industrial Production decreased by 0.2% in July. ECB’s committee member, Olli Rehn, gave an interview in which he stated that European policymakers need to “come up with a significant and impactful policy package in September."
In the meantime, news coming from China indicating that the US has violated the consensus reached in Osaka exacerbated risk-aversion during European trading hours. Later in the day, the Chinese FM crossed the wires saying that they are hopeful that the US could meet them halfway on trade negotiations, but US President Trump quickly said that any deal with China should be made “on our terms.” Despite tensions remain, equities were a bit more stable as well as government debt yields.
This Friday, the EU will release June Trade Balance, while the US will publish July Housing Starts and Building Permits, and the more relevant preliminary Michigan Consumer Sentiment Index for August, foreseen at 97.2 from 98.4 in July
EUR/USD short-term technical outlook
The EUR/USD pair has fallen for a third consecutive day, finishing the US session at around 1.1100, and below the 61.8% retracement of the latest daily advance at 1.1110, now the immediate resistance. The 4 hours chart shows that an intraday attempt to regain the upside was rejected by selling interest aligned around a bearish 100 SMA, while technical indicators have extended their declines within negative levels, maintaining their bearish slopes near oversold readings. The base of the range is the yearly low at 1.1026, a possible target for this Friday as long as attempts to recover remain capped by 1.1160.
Support levels: 1.1070 1.1025 1.0980
Resistance levels: 1.1110 1.1160 1.1195
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