EUR/USD holds steady above 1.1100 ahead of a Big week
|- EUR/USD weighed down by broad USD strength, Eurozone economic slowdown fears.
- Technical set up remains in favor of the EUR bears ahead of a Big week.
The EUR/USD pair trades around a flat-line near 1.1130 region, consolidating last week’s declines, as markets remain unnerved ahead of the key FOMC, Eurozone flash GDP and US payrolls data due later this week.
Focus on Eurozone GDP, FOMC
The spot manages to hold on above the 1.11 handle, but the bias remains tilted to the downside amid US-Eurozone macroeconomic divergence. The US Q2 GDP growth figures bettered estimates, with 2.1% y/y while the recent streak of downbeat Euro area manufacturing PMI reports boosted the risks of a recession, as the focus shifts towards the Eurozone Preliminary Flash GDP for Q2 due for release this Wednesday.
Meanwhile, markets further weigh in the prospect of a no-deal Brexit, adding to the bearish bias in the shared currency. Additionally, the pair remains pressured by the widening US-German 10-year yield differential, after the European Central Bank (ECB) signaled last week that it is likely to cut interest rates deeper into negative and adopt more easing measures in September. In contrast, the US Federal Reserve (Fed) is likely to deliver a smaller rate cut this Wednesday, favoring the dollar bulls.
Looking ahead, the spot is expected to remain on the back foot, as markets await the key events risks ahead of the fresh round of the US-China trade talks, starting this Tuesday. Meanwhile, the EU docket remains data-empty for today and hence, the US regional Manufacturing Business Index is eyed for some fresh trading impetus.
EUR/USD levels to watch
FXStreet’s Analyst, Anil Panchal, notes: “23.6% Fibonacci retracement of a week-long downpour completing on July 25, at 1.1145, followed by 7-day old downward sloping resistance-line, at 1.1158, acts as immediate upside barriers. Should prices rally beyond 1.1158, July 25 high around 1.1189 and 1.1210 can please buyers. Alternatively, a downside break of 1.1115 support-line can fetch prices to Thursday’s low of 1.1101 that holds the key to the quote’s south-run towards mid-2017 bottom close to 1.10000 mark.”
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