EUR/USD analysis: easing bullish interest despite dollar's weakness

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1651

Improved market sentiment weighed on the USD, but EUR/USD remained below Monday's high.
Trade war concerns put temporarily aside, but still the main market motor.

The FX board was all about broad dollar weakness during the first half of Tuesday amid a better market mood. The EUR/USD pair managed to recover from sub-1.1600 level to as high as 1.1672, stalling its recovery on mixed EU data. According to official releases, industrial producer prices were up by 0.8% in the Union in May, doubling the expected 0.4% and much better than April's flat reading. Retail Sales, however, remained unchanged in the same month, while April's figure was downwardly revised to -0.1%. The improved sentiment came as a result of an agreement within German coalition government, and news coming from China, as the director of the PBOC's financial research institute, Sun Guofeng, said that they won't use the Yuan as a weapon in a currency war.

The US released its ISM NY Index on Business Conditions for June, down to 55 from 56.4, this last revised lower from a previous estimate of 66.9, and the IBD/TIPP Economic Optimism Index for June, up to 56.4 from the previous 53.9. Factory Orders in May surprised to the upside, up by 0.4%. Wednesday will be a quiet day with the US markets on holidays, and the only relevant releases being the final services and composite PMI for the EU.

The EUR/USD pair settled around 1.1650 mid-US afternoon as Wall Street closed earlier, little changed for the day, and heading into the Asian session with a neutral-to-bearish stance in the short-term, given that in the 4 hours chart, the pair is still developing between moving averages, with the 200 SMA maintaining its bearish slope above the current level. The Momentum indicator in the mentioned chart heads south around its mid-line, while the RSI heads nowhere at around 52. The 1.1620 level is the immediate support, with a stronger one at 1.1590, with a break below this last needed to confirm a steeper decline.

Support levels: 1.1620 1.1590 1.1550

Resistance levels: 1.1670 1.1720 1.1755

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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