EUR/USD Analysis: short-term bearish case confirmed by pullback to 1.1110
|EUR/USD Current Price: 1.1082
- Market mood remained positive amid Trump reporting progress in talks.
- EU inflation fell by more than anticipated in July, Germany said to be preparing fiscal stimulus.
- EUR/USD capped by a critical Fibonacci resistance, at risk of extending its slide.
The EUR/USD pair lost some ground this Monday, ending the day in the 1.1080 area after peaking for the day at 1.1113. The shared currency suffered a macroeconomic setback, as data from the Union was generally discouraging. The EU adjusted current account surplus narrowed to 18.4B euros in June from 30.3B in May. Also, July inflation was much worse-than-anticipated, down by 0.5% MoM and up by just 1.0% YoY in July. The core yearly CPI came in at -0.6% against a 0.3% advance anticipated by the market. There was also a report making the rounds about Germany preparing to introduce fiscal stimulus measures as a contingency in the event of a crisis. The latest Bundesbank report indicated that the overall economic performance could extend its decline, amid the continuing downturn in the industry. The US macroeconomic calendar had nothing to offer in the first trading day of the week. US President Trump reiterated that the Fed needs to cut rates by 100 basis points, for the economy to do “even better.” The dollar advanced in the US afternoon as Fed’s Rosengren said that he does not see a lot of need to take action on monetary policy.
This Tuesday, Germany will release the July Producer Price Index, seen up 0.1% MoM and by 1.1% YoY. The EU will publish June Construction Output, while the US doesn’t have relevant macroeconomic data to offer. Attention shifts to Wednesday, when the FOMC will publish the Minutes of its latest meeting.
EUR/USD short-term technical outlook
The EUR/USD pair met sellers around the 61.8% retracement of its latest bullish run broken last Friday, indicating that bears retain control. In the 4 hours chart, the 20 SMA maintains a strong bearish slope above the current level and converging with the mentioned Fibonacci resistance at around 1.1110, while the larger ones also head south, but above the shorter one. Technical indicators have remained directionless within negative levels throughout the day, as the pair was confined to a 30 pips’ intraday range. The risk remains skewed to the downside, although to confirm a bearish acceleration, the pair would need to break below 1.1065.
Support levels: 1.1065 1.1025 1.0980
Resistance levels: 1.1110 1.1160 1.1195
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