EUR/USD Current price: 1.0909
- The market mood improved, although have not yet stabilized.
- Worse-than-anticipated European data weighs on the Euro.
- EUR/USD holds above 1.0900, but additional slides remain on the table.
Panic receded on Tuesday after dominating the first day of the week, helping the safe-haven US Dollar to recover some ground. The EUR/USD pair kept retreating from a fresh multi-month high of 1.1008 and trades near the 1.0900 threshold ahead of the United States (US) opening. Nevertheless, markets have not yet stabilized.
Among Asian indexes, the Nikkei 225 was the best performer, adding roughly 10%, although the rest traded mixed, hovering around their opening levels. European equities seesaw between gains and losses, reflecting some persistent nervousness.
Meanwhile, US Treasury yields recovered after Monday’s collapse, supporting the ongoing USD bounce. The 10-year note offers 3.84%, while the 2-year note yields 3.97%, both recovering from lows in the 3.6% region.
Adding to the Euro’s weakness, the Eurozone published June Retail Sales, which resulted worse than anticipated. Sales were down by 0.3% in the month and 0.3% from a year earlier. German data was a bit more encouraging, as Factory Orders rose 3.9% MoM in June, beating expectations, although they fell by 11.9% from a year earlier. Finally, the US published the June Goods and Services Trade Balance, which posted a wider-than-anticipated deficit of $73.1 billion.
EUR/USD short-term technical outlook
From a technical point of view, the EUR/USD pair trades at around Friday’s close, trimming Monday’s gains. The corrective slide may extend in the upcoming sessions, as technical indicators turned firmly lower, although the Relative Strength Index (RSI) indicator remains within positive levels, limiting the bearish case. Even further, EUR/USD develops above all its moving averages, with the 20 Simple Moving Average (SMA) advancing above the longer ones, in line with the dominant bullish trend.
In the near term, and according to the 4-hour chart, the ongoing slide seems corrective. Technical indicators have retreated sharply from overbought readings and maintain their downward slopes within positive levels. At the same time, the 20 SMA keeps heading north above directionless 100 and 200 SMAs, but it’s partially losing its upward strength. A break through the 1.0890 support should anticipate another leg south, although buyers are likely to take their chances on dips.
Support levels: 1.0890 1.0845 1.0800
Resistance levels: 1.0950 1.1005 1.1045
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