EUR/USD Forecast: Selling picks up in a risk-averse environment
|EUR/USD Current Price: 1.0907
- Turmoil in the Chinese real state sector undermined the mood at the beginning of the week.
- Market players focus on United States Retail Sales to be out on Tuesday.
- EUR/USD accelerates its decline and aims to pierce the 1.0900 threshold.
A sour market mood keeps the US Dollar strong at the beginning of the week, with EUR/USD currently trading at fresh August lows. Trouble in the Chinese real state sector weighed on Asian shares and pushed investors into safe-haven USD on news that giant Country Garden Holdings warned of a $7.6 billion loss in the first half of the year.
Contagion fears spread into the early European session, although concerns receded, with local stock markets mostly trading in the green. Nevertheless, the Greenback remains the best performer across the FX board, appreciating against most major rivals. Meanwhile, Wall Street trades choppy ahead of the opening, while government bond yields tick higher, providing additional support to the USD.
The Euro turned less attractive following German data, as the July Wholesale Price Index fell 0.2% MoM and by 2.8% from a year earlier. The macroeconomic calendar has nothing else to offer this Monday, with speculative interest turning their attention to United States (US) Retail Sales to be released on Tuesday.
EUR/USD short-term technical outlook
The EUR/USD pair resumed its decline and trades below a daily descendant trend line coming from 1.1275, July monthly high. The pair aimed to advance beyond it in the previous two trading days but lacked momentum, and buyers finally gave up. Furthermore, the pair extends its decline below the 61.8% retracement of the 1.0833/1.1275 rally at 1.1005 while approaching the 10900 threshold.
Technical readings in the daily chart support a continued decline as EUR/USD is piercing a mildly bullish 100 Simple Moving Average (SMA), while the 20 SMA gains bearish traction far above the longer one. At the same time, the Momentum indicator turned lower within negative levels, while the Relative Strength Index (RSI) indicator accelerated its slide, maintaining a firmly bearish slope at around 40.
For the near term, the 4-hour chart also shows the risk skewing to the downside. EUR/USD trades below all its moving averages, with the 100 SMA crossing below the 200 SMA, both above a mildly bearish 20 SMA. Finally, technical indicators turned south within negative levels, reflecting increasing selling interest.
Support levels: 1.0870 1.0825
Resistance levels: 1.0960 1.1005 1.1055
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