EUR/USD analysis: pressure mounts on high-yielding assets
|EUR/USD Current price: 1.1394
- Fears dominated the financial world and the greenback stood as the overall winner.
- German GDP, inflation, and ZEW survey to be out this Tuesday.
Risk aversion dominated the financial world at the beginning of the week, with the USD and the JPY gaining ground against all of their major rivals, with dollar's demand overshadowing pretty much everything else, as even gold prices sunk to fresh yearly lows. The EUR/USD pair traded as low as 1.1362, briefly recovering the 1.1400 level early US session but unable to hold on to gains.
With no macroeconomic news scheduled, markets gyrated around Turkey, with relief headlines triggering some profit booking and the dollar and the yen giving back some ground. Such headlines didn't modify the root of the Turkish crisis as President Erdogan continues refusing to raise rates. Rather, the local central bank just announced it´s ready to provide all the liquidity needed by local banks, which didn't prevent the Lira from holding at record lows against the greenback. There was another header indicating the possible release of a US pastor incarcerated in Turkey, but the news was quickly denied by the US embassy in Ankara. Still, sentiment improved modesty ahead of the US opening, yet as Turkey's financial woes continued, risk turned back off.
Germany will offer several key figures this Tuesday, including July inflation, expected to have advanced 2.0% YoY, and preliminary Q2 GDP, with the economy seen growing by 0.4% following a 0.3% advance in the previous quarter. The country will also release the ZEW survey on economic sentiment, while the EU will provide preliminary Q2 GDP, foreseen unchanged at 0.3%. The data could interrupt risk-related trading, which anyway will continue dominating the financial world.
Technically, the EUR/USD pair is at risk of reaching fresh yearly lows, after failing to rally beyond the 1.1400 figure. The intraday recovery seemed a due correction on profit-taking, given that in the 4 hours chart, technical indicators advanced just to erase extreme oversold conditions, but lost their upward strength afterward, now back signaling additional declines ahead. In the same chart, the 20 SMA maintains its vertical bearish slope, now at around 1.1480. A downward acceleration through the daily low will likely result in an approach to the 1.1300 figure, while spikes up to 1.1450 will probably continue attracting selling interest.
Support levels: 1.1360 1.1330 1.1300
Resistance levels: 1.1420 1.1450 1.1485
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