EUR/USD Current Price: 1.1017
- Risk aversion fueled by trade tensions, US deploying forces in the Middle East.
- September preliminary Markit indexes to be out this Monday.
- EUR/USD technically bearish as long as below 1.1085.
Risk aversion took over the FX board on Friday, weighing on high-yielding assets. The EUR/USD pair, finished the week just a handful of pips above the 1.1000 figure amid mounting tensions between the US and China. News that Chinese agricultural officials, who were expected to visit US farm states next week, have cancelled the visit, spurred the negative sentiment, fueled by comments from US President Trump, who said that an increase in China’s agricultural purchase would not be enough and that he wants a “complete deal.”
Risk aversion and growth
Data from the EU released by the end of the week was mixed, as German’s Producer Prices were worst than anticipated in August, down by 0.5% in the month and up by just 0.3% when compared to a year earlier. However, the preliminary estimate for the EU Consumer Confidence improved to -6.5 in September. The US macroeconomic calendar remained empty. Following the market’s close, US Secretary of Defense Mark Esper announced that the Pentagon will deploy US forces to the Middle East, which will be “defensive in nature,” a result of the Iranian attack on Saudi Arabian oil facilities. The news will likely keep risk aversion fueled at the weekly opening.
This Monday, Markit will release the preliminary estimates of September PMI for the Union and the US. The market’s forecasts point for slight improvements in the Union’s manufacturing output, although still expected in contraction territory. In the US, on the other hand, the indexes are foreseen barely holding in expansion territory.
EUR/USD short-term technical outlook
The EUR/USD pair has finished the week around the 38.2% retracement of its latest daily decline, after failing for a second consecutive week to surpass the 61.8% retracement of the same decline, confine, however, to familiar levels. In the daily chart, the Momentum indicator turned flat in positive ground, but the RSI heads lower around 44, while the pair settled below bearish moving averages, all of which skews the risk to the downside. Shorter-term, and according to the 4 hours chart, the downside is also favoured as the pair is developing below its moving averages, while technical indicators stand within negative levels, although without clear directional strength.
Support levels: 1.0980 1.0955 1.1020
Resistance levels: 1.1045 1.1085 1.1120
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