EUR/USD Analysis: recovery seems corrective for now

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1236

EUR/USD recovers after testing 1.1200, but the bullish picture still unclear.
US disappointing data made put dollar bulls on hold for now.

The EUR/USD pair flirted with 1.1200 at the beginning of the day, bouncing from the area just modestly, as the psychological barrier is a tough bone to break. Nevertheless, the American currency retains its strength as the latest US macroeconomic releases put in doubt a dovish turn of the Fed, given that consumption remains resilient. The US Central Bank is scheduled to meet this week, and its decision will be key for the dollar. Meanwhile, ECB´s Benoit Coeure warned of “bleak” indicators about the health of the global economy, and that risks could materialize in the next few meetings.

News coming from the EU showed that Labour Cost rose by less-than-anticipated in Q1, up by 2.4% vs. the 2.6% forecasted. As for the US, the country has just released the NY Empire State Manufacturing Index for June, which came much worse than anticipated, printing -8.6 vs. the previous 17.8 and the expected 10.0. Pending of release is the NAHB Housing Market Index for June, foreseen at 67 vs. the previous 66.

The dollar eased mid-European session, coming under further pressure after the release of discouraging US data, resulting in the EUR/USD pair trading in the 1.1240 region ahead of Wall Street's opening. US equities are set to open lower, as European ones are fading their early strength, now struggling to remain afloat. The 4 hours chart shows that the pair bounced from around the 61.8% retracement of its latest daily advance, and trades now a handful of pips above the 50% retracement of the same rally, also above the 100 SMA, which converges with the mentioned Fibonacci level at around 1.1230. Technical indicators in the mentioned chart have recovered from oversold readings, but remain well below their midlines, keeping the ongoing advance as a corrective move. The upside will look more open if the pair manages to extend beyond the 1.1260/70 price zone, now the immediate resistance.

Support levels: 1.1230 1.1185 1.1140

Resistance levels: 1.1265 1.1310 1.1350

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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