- EUR/USD meets support in the 1.1130 area so far.
- Repatriation flows continue to support EUR, but momentum fades.
- Markets’ focus stays on yields, US data, US-China trade war.
After two consecutive days with negative price action, EUR/USD appears to have met some dip-buyers in the second half of the week, although gains appear so far contained by the 1.1150/60 band.
The pick up in the sentiment around the Greenback remains firm, as US-China trade tensions have subsided somewhat particularly after the White House delayed the implementation of another round of tariffs on Chinese products.
However, the outlook on EUR is expected to remain fragile as ‘repatriation’ flows seems to be losing traction, German yields tumble further and results from the docket in Euroland are everything but encouraging. If we add the prospects of further easing by the ECB as soon as at the September meeting, there seems to be one way for the single currency in the near to medium term.
From the technical perspective, the 55-day SMA in the 1.1230 area offers interim hurdle ahead of monthly tops around 1.1250. Above this area, the selling pressure is expected to mitigate somewhat. That said, a probable visit to the critical 200-day SMA at 1.1290 should then come into focus. On the downside, bets keep building for a move to the 1.1100 neighbourhood in the short-term horizon. If cleared, the 2019 low at 1.1026 is expected to return to the investors’ radar.
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