EUR/USD analysis: searching for catalysts
|EUR/USD Current Price: 1.1331
The EUR/USD pair spent most of the day moving back and forth above the 1.1300 level, unable to find a clear direction. The shared currency was supported by a better market mood, as China announced more stimulus measures aimed to support the local economy, which include easing financing rules to boost domestic government spending on infrastructure and public works. Nevertheless, the advance stalled following the release of June Sentix Investor Confidence Index, which came in at -3.3, well below the 2.9 expected and the previous 5.3. According to the official source, sentiment deteriorated due to collapsing US-China trade talks, and the escalation in their trade dispute. Additionally, the report indicated that the situation in Germany deteriorated further, sliding into negative territory for the first time since March 2010, lifting odds of a recession. The US released May Producer Prices, up monthly basis by 0.2% and by 1.8% when compared to a year earlier, with the latter missing the market's expectations of 2.0%. On Wednesday, the main economic events include a speech from ECB President, Mario Draghi, and the US consumer price index for May (1.9% for the main index and 2.1% for the core expected).
From a technical view, the 20-SMA in 4-hour charts has acted as dynamic intraday support, keeping pullbacks in check. Although the picture remains overall positive for the pair, the Momentum indicator has turned south in 4-hour charts while the RSI is approaching overbought territory, suggesting EUR/USD might lack the strength to clearly break above last week highs, at least in the very short-term. Should the pair overcome the mentioned level, next resistance is seen at 1.1366 (200-day SMA) and not much until 1.1460. On the other hand, a clear break below 1.1290 (23.6% Fibo retracement of the 1.1107/1.1347 rally) could mount pressure on EUR/USD, with the 1.1210/1.1190 as next target, where different supports collude.
Support levels: 1.1290 1.1255 1.1190
Resistance levels: 1.1350 1.1365 1.1400
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