EUR/USD Analysis: losing ground amid risk aversion
|EUR/USD Current Price: 1.1001
- The US menaced the EU with tariffs, adding pressure on the common currency.
- German ZEW survey expected to show a modest bounce in business sentiment.
- EUR/USD poised to re-test the yearly low at 1.0926 ahead of the Fed.
The EUR/USD pair has traded with a heavy tone this Monday, settling at pre-ECB levels around 1.1000 at the end of the American session. The slump was driven by a risk-averse sentiment, triggered by weekend news, not only related to Europe. The primary catalyst for the negative sentiment was a drone attack on Saudi Arabia oil facilities, affecting up to 50% of the country’s production. Another headline that weighed on the shared currency came from the World Trade Organization, as the organization ruled in favor of the US in the case of illegal subsidies granted to European aerospace Airbus. Fears are that the US will now impose punitive tariffs to EU products for as much as $21billion.
The macroeconomic calendar was quite scarce, as the only report released by these economies was the US NY Empire State Manufacturing Index, which resulted at 2 in September, down from 4.8 in August and below the expected 4.0.
This Tuesday, Germany will publish the September ZEW survey on Economic Sentiment for the country and the EU, both seen improving from August readings, although still within negative levels. The US has scheduled August Capacity Utilization, and Industrial Production, the September NAHB Housing Market Index and TIC Flows for July.
EUR/USD short-term technical outlook
The EUR/USD pair has retreated further from the 1.1109 peak set last week, losing the positive stance seen on previous updates. The 4 hours chart shows that the pair is now trading below its 20 and 100 SMA, after faltering around the 200 SMA by the end of last week. The pair has also broken below the 38.2% retracement of its latest daily decline and is at risk of extending the slump toward the yearly lows. Technical indicators in the mentioned chart are diverging, as the Momentum aims north within positive levels while the RSI eases, currently standing at 38. The downside will become clearer on a break below 1.0980 a Fibonacci level and the immediate support.
Support levels: 1.0980 1.0955 1.0920
Resistance levels: 1.1020 1.1060 1.1100
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.