EUR/USD Analysis: bears to attempt a break of 1.1181

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1214

ECB Villeroy´s dovish comments and plummeting German business sentiment weighed on the EUR.
US Retail Sales surprised to the upside, up by 0.4% MoM in June.
EUR/USD short-term bearish, room to test the yearly low at 1.1106.

The common currency is under strong selling pressure, weighed by soft local data, with the EUR/USD pair down also on better-than-expected US Retail Sales. The pair traded around 1.1220 ahead of the release of this last, following comments from ECB’s Francois Villeroy, who said that the central bank’s mandate has nothing to do with the exchange rate, adding that monetary policy can’t do everything, and cannot repair protectionism damage. Furthermore, the German ZEW survey showed that economic sentiment in the country fell to -24.5, worse than anticipated, sending local government bond yields near record lows.

US Retail Sales were up by 0.4% in June, much better than the 0.1% anticipated, while the core reading, Retail Sales Control Group increased by 0.7% vs. The 0.3% expected. The strong numbers keep indicating that, despite the US Central Bank is willing to deliver monetary stimulus, the need for it is limited. Speaking of which, Fed’s head, Powell will be on the wires later today, and market players will be scrutinizing his words in search of clues about the future of monetary policy.

EUR/USD short-term technical outlook

The EUR/USD pair is heading toward 1.1181, the low set earlier this July, with room to extend its decline toward the yearly low at 1.1106 if 1.1181 gives up. Technical readings in the 4 hours chart support such a slump, as the pair has plunged after some consolidation below all of its moving averages, while technical indicators turned sharply lower, now nearing oversold levels with vertical slopes. Now trading a few pips above the so far daily low of 1.1208, the bearish case could lose momentum on a recovery above the 1.1245 area.

Support levels: 1.1180 1.1150 1.1110

Resistance levels: 1.1245 1.1280 1.1310

View Live chart for the EUR/USD

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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