EUR/USD breaks lower to test 1.1700 on resurgent US dollar demand
|- Resurgent USD demand and falling German yields add to the weight on EUR/USD.
- Draghi makes no comments on the monetary policy, focus shifts to the US PPI.
EUR/USD failed once again at higher levels and reversed nearly 30-pips to test the demand zone near the 1.1700 levels, as the US dollar catches fresh bids against its major rivals heading towards the US PPI release.
The risk-off sentiment seen in the European markets amid escalating US-China trade tensions prompt investors to seek safety in the world’s reserve currency, the US dollar.
More so, the sell-off in the 10-year German yields also weighed negatively on the common currency. The 10-year German bond yields drop -6% below the 0.30 level.
Also, the EUR bulls were disappointed, as the European Central Bank (ECB) President Draghi failed to touch upon the bank’s monetary policy program in his speech at the 9th ECB Statistic Conference.
Attention now turns towards the US PPI release for fresh trading opportunities in the spot, as Thursday’s ECB June meeting minutes and US CPI report are eagerly awaited.
EUR/USD Technical Levels
Slobodan Drvenica at Windsor Brokers, noted: “Falling 55SMA (currently at 1.1758) continues to cap for the third straight day and sustained break higher is needed to generate bullish signal and turn near-term focus higher. Daily cloud base (1.1713) holds today's action for now and marks initial support, while stronger bearish signal could be expected on break below Tuesday's low at 1.1690, reinforced by 10/30SMA bull-cross. Mixed configuration of daily MA's supports sideways mode for now, but south-heading slow stochastic and momentum maintain pressure. Look for direction signal on break of either side. Res: 1.1746; 1.1758; 1.1790; 1.1840. Sup: 1.1713; 1.1690; 1.1658; 1.1658.”
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