EUR/USD Analysis: no relevant breakout ahead of critical events

EUR/USD Current Price: 1.1099

• The market’s attention shifts toward the FOMC Minutes and the Jackson Hole Symposium.
• Italian political turmoil and fears of a German recession weigh on the EUR.
• EUR/USD bounced from a relevant static support, remains in the bearish path.

The EUR/USD pair came under selling pressure throughout the first half of the day, weighed by Monday’s news related to raising odds for a recession in Germany, and political turmoil in Italy, as Deputy PM, Matteo Salvini, said that a 50B euro budget is necessary in 2020 to bring about a “shock” fiscal stimulus program, while PM Conte resigned after Salvini broke their coalition government and called for an election. Salvini, later declared that he is willing to stay in the government to approve the budget. Meanwhile, the greenback benefited from Fed’s Rosengren words, who cooled down speculation of further rate cuts in the US. During US trading hours, the pair managed to bounce from a daily low at 1.1065, as dollar’s rally lost steam once reaching the critical level. The macroeconomic calendar remained scarce, with unimpressive figures coming from the EU, as German’s July PPI was up by 0.1% MoM and by 1.1% YoY, meeting the market’s expectations, while the EU Construction Output in June was up by 1.0% YoY, following a 2.0% advance in the previous month.

This Wednesday, there won’t be macroeconomic releases coming from the EU, while the US will release July Existing Home Sales and more relevant, the Minutes of the latest FOMC Meeting. The market will be looking for any hint about the future of monetary policy, with one more rate cut in the docket for this year. Later this week, the Jackson Hole Symposium will take place, with the heads of the most relevant central banks offering speeches.

EUR/USD short-term technical outlook

The EUR/USD pair is trading around the 1.1100 figure, flat weekly basis. The recovery fell short of changing the dominant bearish trend, as the pair remains below the 61.8% retracement of its latest bullish run at 1.1110. Furthermore, it set a lower low and a lower high daily basis. In the short term, and according to the 4 hours chart, the pair is currently advancing above a bearish 20 SMA, which kept sliding below the larger ones. Technical indicators have bounced, the Momentum advancing above its 100 line and the RSI at 48, indicating a limited bullish potential. The advance could gain pace if the pair breaks above the mentioned Fibonacci resistance.

Support levels: 1.1065 1.1025 1.0980

Resistance levels: 1.1110 1.1150 1.1195  

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