EUR/USD: Corrective pullback fades below previous support, 200-SMA
EUR/USD remains on the back foot, receding taking rounds to 1.2120-25, amid a sluggish Asian session trading on Wednesday. Sellers to keep reins as unless prices cross three-week-old resistance line. Easing bullish bias of MACD adds to the downside signals.
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The EUR/USD pair trades at daily lows, a few pips above the 1.2100 mark. The near-term picture is bearish. The 4-hour chart shows that the pair retreated from around a bearish 20 SMA, which heads firmly lower below the longer ones. Technical indicators have turned south within negative levels, indicating increased selling interest. The bearish momentum will be clearer once below 1.2090, the immediate support level.
Support levels: 1.2090 1.2050 1.2010
Resistance levels: 1.2125 1.2160 1.2200
Demand for the American dollar picked up steam ahead of Wall Street’s opening, with EUR/USD retreating from a daily high of 1.2123 but holding above the 1.2100 threshold on a first attempt. The greenback retained its strength after the release of mixed US data. May Retail Sales were down 1.3% MoM, worse than anticipated, while the Producer Price Index in the same month jumped to 6.6% YoY, another sign of mounting inflationary pressures.
Earlier in the day, Germany published the final version of its May inflation readings. The annual Consumer Price Index was confirmed at 2.4%, as previously estimated. The EU published the April Trade Balance, which posted a seasonally adjusted surplus of €9.4 billion.
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The EUR/USD pair trades at fresh monthly lows around the 1.2100 level and with increased bearish potential. Investors read past upwardly revised US inflation figures, which hit 5% YoY in May, accelerating at the fastest pace since 2008.