EUR/USD analysis: traders sidelined on political headers
EUR/USD Current price: 1.1612
- Calendar to remain light until Friday, with politics likely remaining as the key market motor.
- USD back and forth movements purely linked to sentiment.
The EUR/USD pair finished the day as it started, confined to a tight range around the 1.1600 level, driven purely by the ebb and flow of the greenback´s movements, these last, directly correlated to market's mood and political headers. The USD was under selling pressure at the beginning of the day, with the pair up to 1.1627 at the beginning of the day, to fell to 1.1572. The mood turned off and on following political headers, with dollar´s intraday gains being the result of a nose-diving Pound, dominated by fears of a no-deal Brexit, later exacerbated by headlines indicating that the UK government is preparing a no-deal Brexit plan. Sentiment turned sour once the Chinese Ministry of Commerce announces a 25% retaliatory tariffs on $16 billion worth of US goods, which includes auto and crude oil. Stocks lost their initial momentum, and closed down in Europe, while US ones traded mixed, off their early highs. The greenback came under renewed selling pressure in the US afternoon, but remain within familiar levels against its European rivals.
There were no relevant macroeconomic releases, with the EU calendar empty and the US releasing MBA weekly mortgage applications, down 3.0% in the week to July 30. Fed's Richmond President Barkin hit the wires, saying that the central bank should continue rising rates and adding that concerns related to tariffs are rising. Thursday will be a bit more active in the macroeconomic front, although first-tier events won't be out until Friday. Political headlines are set to dominate markets for at least one more day.
Technically, the EUR/USD pair has little to offer, as the early rally met sellers around the daily ascendant trend line broken last week, still a relevant resistance in the 1.1620/30 price zone. The short-term picture offers a mildly positive tone, as the pair managed to hold above a directionless 20 SMA, while technical indicators advanced, the momentum at fresh August highs and the RSI at around 51. The same chart, however also shows that the 100 SMA is moving south below the 200 SMA, both in the 1.1660 region. The pair will have a more sustainable upward potential on a break above this last. Risk will turn negative on a break below 1.1550.
Support levels: 1.1585 1.1550 1.1510
Resistance levels: 1.1625 1.1660 1.1700
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.
