EUR/USD Forecast: Rallying on banks’ earnings reports
|EUR/USD Current Price: 1.1389
- Upbeat earnings reports from big banks pushed Wall Street higher and hit the greenback.
- Speculative interest largely ignored dismal European macroeconomic data.
- EUR/USD holds on to intraday gains near the yearly high, 1.1460/70 comes next.
The EUR/USD pair extended its advance towards 1.1406, its highest since last June when the pair reached a multi-month high of 1.1422. Currencies continued to follow the lead of equities, although this time, stocks’ behavior had not only depended on sentiment. Indeed, global indexes started the day in the backfoot, weighed by coronavirus-related concerns after California announced a lockdown to contain the spread of COVID-19. However, stocks markets later recovery on the back of solid earnings reports from big banks such as Citigroup and JP Morgan. There’s a trick, as banks’ revenues are directly linked to Fed’s massive stimulus measures meant to prop up credit markets.
Macroeconomic data released this Tuesday included the July German ZEW Survey, which showed that Economic Sentiment in the country eased to 59.3 in July, below the previous 63.4 and the expected 60. For the EU, Economic Sentiment improved from 58.6 to 59.6 but missed the market’s expectation of 78.1. Germany also published June inflation, which met the market’s expectations printing at 0.9% YoY. As for the US, the country unveiled June inflation, which was up in the month by 0.2%. When compared to a year earlier, CPI was up by 0.6%, while the core annual reading came in at 1.2%, better than the 1.1% expected.
The macroeconomic calendar for these two economies will be quite scarce this Wednesday, with nothing scheduled in the EU and the US reporting June Industrial Production and Capacity Utilization.
EUR/USD short-term technical outlook
The EUR/USD pair is trading just below the 1.1400 level as the day comes to an end, holding on to intraday gains despite partially losing its positive momentum. The 4-hour chart shows that technical indicators decelerated their advances after reaching overbought levels, but hold nearby. The pair, in the meantime, develops well above all of its moving averages, which finally turned north. The pair is ready to challenge June high at 1.1422, with a break above it exposing the 1.1460/70 price zone, a long-term strong static resistance area.
Support levels: 1.1370 1.1320 1.1270
Resistance levels: 1.1425 1.1460 1.1500
View Live Chart for the EUR/USD
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