EUR/USD analysis: bears dominate the scene despite latest bounce

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1653

EU inflation came worst-than-expected for June, undermining EUR's demand.
Profit taking pushed the USD lower in the US session, poor housing data triggered the decline.

The EUR/USD pair bounced from a 2-week low of 1.1601 to practically trim its daily losses. The greenback started the day extending its Tuesday's rally, base on Fed's Powell words, but its rally came to an end ahead of the US opening, when the country released June Housing Starts and Building Permits, both posting large and unexpected declines. Housing Starts plunged 12.3% in June, vs. the expected decline of 2.2%, while Building Permits, which were expected to surge 6.0%, posted a 2.2% decline. Mid-US afternoon, Trump hit the wires saying that he may do separated deals with Mexico and Canada, reviving partially trade war concerns. The EU released June inflation earlier in the day, with core readings disappointing, flat for the month and up 0.9% YoY, adding to early EUR weakness. Thursday will be lighter from the macroeconomic front, as the US will release its usual weekly unemployment figures and the Philly Manufacturing Survey for July.

The pair trades in the lower end of its latest range, as the lowest for the three last weeks, has been established at 1.1590, the level bears need to break to see some further downward momentum. In the meantime, the 4 hours chart shows that the price continues developing below a congestion of directionless moving averages, which clearly reflects the absence of a trend, while technical indicators hold within negative levels, the Momentum flat, and the RSI aiming higher but at 45, limiting chances of a steeper recovery. The pair would need to settle above 1.1720 to become more attractive to bulls, as it would have then more chances to continue toward the 1.1855 region.

Support levels: 1.1620 1.1590 1.1550

Resistance levels: 1.1685 1.1720 1.1755

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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