EUR/USD analysis: dollar buyers begin hesitating

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1962

The EUR/USD pair fell to a fresh weekly low of 1.1925 to end the day flat in the 1.1960 region, as dollar´s demand on improved market mood receded in the US afternoon. Still, the greenback enjoyed another positive day, advancing through the first two sessions of the day following the lead of equities and yields, mostly higher for a second consecutive day. The pair saw limited action amid a scarce macroeconomic calendar, with no relevant news coming from Europe, and with the US only releasing its NFIB Business Optimism index for August, up to 105.3 from previous 105.2 and the expected 105.0. Vitor Constancio, Vice-President of the ECB, was on the wires this Tuesday, commenting on monetary policy, but adding nothing new to what the market already knows, backing the case of keeping monetary policy accommodative until the 2% inflation target is reached.

This Wednesday things will become more interesting, with the release of German inflation and US PPI among others. In the meantime, the EUR/USD pair seems to have found a temporal bottom, although it's still at risk of falling further, as in the 4 hours chart, the pair is developing below a marginally bearish 20 SMA, whilst technical indicators are recovering firmly from oversold territory, still below their mid-lines. As long as the price holds above 1.1910, the downward potential will be limited, yet below it, the pair could extend its decline down to a strong static support around 1.1870, while beyond this last, there's scope for an extension down to 1.1822, last week low. The pair would need to at least surpass Tuesday´s high of 1.1977 to gain some upward traction, but bulls won't come back in force unless the pair extends beyond 1.2030.

Support levels: 1.1925 1.1870 1.1825

Resistance levels: 1.1990 1.2030 1.2070

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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