Traders sold the shared currency on Tuesday and the EURUSD pair dived nearly half a percent as it was falling toward the 1.12 mark during the US session.
Earlier, July´s German ZEW surveys failed to meet estimates and the economic sentiment gauge worsened further to -24.5 from -21.1 previously, while the current situation also fell sharply back into negative territory. It looks like the manufacturing sector in the biggest EU economy will stay in a recession for a while, while services sector is also seen slowing.
Shortly after, the EU trade balance came out and it improved notably, from 15.7 billion EUR to 20.2 billion EUR, but this failed to help the euro.
The focus then shifted toward US data - US retail sales topped estimates and printed 0.4%, above 0.1% expected. The control core group indicator also improved and came out at 0.7%, above 0.6% previously and well beyond 0.3% expected. The greenback pushed higher after these numbers.
From the technical perspective, the 1.12 mark is still a strong support and dips to this level could be bought, especially when the market expects 2-3 rate cuts in the US till the end of the year.
However, should this level fail to hold, bears could be motivated to push the price further lower, with the next target probably near 1.1180 and afterward at 1.1150. On the upside, the first resistance might be seen at 1.1245 and if broken to the upside, the rally could lift the euro to the 1.1285.
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