EUR/USD Analysis: bulls getting tired

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1081

European economies continued to underperform in August, according to Markit.
Wall Street aimed to open with substantial gains and near its weekly highs.
EUR/USD under pressure, buyers still defending the 1.1060 region.

The EUR/USD pair got a boost during European trading hours from better-than-expected Markit PMI, surging to a daily high of 1.1112. According to Markit, the German economy continued to underperform in August, although the indexes came in better-than-anticipated. Services output, according to preliminary estimates resulted at 54.4, its highest in seven months, while Manufacturing output came in at 43.6, better than the previous 43.2. For the Union, the indexes were also above the market’s estimates up to 53.4 and 47.0 respectively. The pair retreated from the mentioned high and fell to 1.1063, with no particular catalyst behind the slide, but probably because bulls giving up after yet another failed attempt to recover above the 61.8% retracement of the latest daily slump. The ECB released the Minutes of its latest meeting, which as usual, was a no-event. Policymakers reiterated that the uncertainty related to trade remains, while inflation expectations remain subdued.

The US has just released Initial Jobless Claims for the week ended August 16, which came in at 209K, better than the 216K forecast. Pending of release are the Markit August preliminary estimates for the Manufacturing PMI and the Services PMI. The European Commission will release August Consumer Confidence, foreseen at -7.0 vs. the previous -6.6.

EUR/USD short-term technical outlook

The EUR/USD pair pierced its previous weekly low but bounced once again from the 1.1060 region. The recovery seems to be backed by a sudden improvement in risk appetite, as Wall Street is poised to open firmly higher, while safe-haven assets are on retreat mode. Nevertheless, the failed attempt to recover above the 61.8% retracement of its latest daily decline at around 1.1110, seems to have been quite a discouraging sign for bulls. The 4 hours chart shows that the pair is currently developing below a flat 20 SMA, although not far away from it and still confined to familiar levels. Technical indicators in the mentioned chart have turned lower, the Momentum still trapped within neutral levels, but the RSI indicator accelerating south at around 41, skewing the risk toward the downside.

Support levels: 1.1065 1.1025 1.0980

Resistance levels: 1.1110 1.1150 1.1195

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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