EUR/USD Current Price: 1.1173
- German and EU business sentiment plummeted in August.
- Growth in the Union in the second quarter to take centre stage.
- EUR/USD at risk of extending its decline on a break below 1.1160.
Risk aversion has dominated the first two sessions of the day, suddenly flipping to quite a positive mood just ahead of the US opening. The U-turn in sentiment came after the US Trade Representative, Lighthizer crossed the wires announcing that additional tariffs on some Chinese imports, will be delayed until December 15. US President Trump later said that the decision was taken to prevent an impact on the Christmas shopping season. Anyway, the headline was enough to take Wall Street out of the red for the week, with the three major US indexes posting robust gains.
Earlier in the day, Germany released the August ZEW survey, which showed that mood among European investors continued deteriorating. The German Economic Sentiment Index plunged to -44.1, the lowest since December 2011, while for the Union, the index plummeted to -43.6, both much worse than anticipated. German final July inflation matched the market’s expectations. In the US, on the contrary, July inflation was upwardly revised to 1.8% YoY. Core yearly inflation came in at 2.2%, making the pair retreat from a daily high of 1.1228, although it only broke below 1.1200 with the trade-related headline.
This Wednesday, Germany will release the preliminary estimate of Q2 GDP, foreseen at -0.1% from a previous 0.4%. The EU will also publish the preliminary estimate of growth in the second quarter, expected at 0.2%, matching Q1 reading. The US macroeconomic calendar will only offer minor data, irrelevant in terms of price action.
EUR/USD short-term technical outlook
The EUR/USD pair is trading near its Monday low at 1.1161 ahead of the Asian opening, with the short-term picture now favoring a downward extension, particularly on a break below the mentioned daily low, as it will also imply a break below a key Fibonacci support, the 38.2% retracement of the latest bullish run. In the 4 hours chart, the pair faltered once again around a mild-bearish 200 SMA, while the 100 SMA converges with the mentioned Fibonacci support, reinforcing it. Technical indicators turned south, entering negative territory, although they are still within neutral levels, skewing the risk to the downside without confirming it at the time being.
Support levels: 1.1160 1.1125 1.1080
Resistance levels: 1.1220 1.1250 1.1285
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