• EUR/USD defends the bounce off two-week low ahead of the key EU, US data/events.
  • Economic fears surrounding Europe, China join mixed US data to challenge pair buyers.
  • Firmer yields, equities challenge bears amid market’s indecision.
  • FOMC Minutes will be eyed for clues of 0.75% rate hike in September.

EUR/USD treads water around 1.0175, keeping the previous day’s rebound in a choppy trading range during Wednesday’s Asian session, as traders await the week’s key catalysts. Also challenging the pair traders are the mixed concerns surrounding growth and central banks.

Fears of economic slowdown, mainly emanating from China and Europe, join firmer Treasury yields and positive equities to confuse the traders. It’s worth noting that the US dollar also retreated amid the market’s indecision.

With this, the US Dollar Index (DXY) refreshed its three-week high before reversing from 106.94. That said, the DXY previously benefited from the flight to safety as China’s readiness for multiple measures to tame recession woes joined Europe’s signals to renew the nuclear deal with Iran while pushing back plans for the closure of Germany’s last three nuclear power plants. On the same line was the Washington Post (WaPo) news that mentioned that Chinese authorities ordered factories to suspend production in several major manufacturing regions to preserve electricity, as the country face the worst heat wave in six decades.

Talking about the data, US Industrial Production grew 0.6% in July versus 0.3% expected and upwardly revised 0.0% prior whereas Building Permits also increased to 1.674M MoM during the stated month versus 1.656 market expectations and 1.696M previous readings. It should be noted that the Housing Starts dropped to 1.446M from 1.599M prior and 1.54M expected. Further, ZEW Sentiment data from Germany and Europe came in weaker for Economic Sentiment but improved a bit for Current Situation.

Amid these plays, Wall Street managed to close on a positive side, despite retreating by the end of the day. That said, the US 10-year Treasury yields snapped a two-day downtrend by regaining 2.80% at the latest. It should be noted that the US 10-year Treasury yields pause the previous day’s rebound while the S&P 500 Futures print mild losses at the latest.

Looking forward, EUR/USD traders will initially respond to the second readings of the Eurozone Gross Domestic Product (GDP), expected to confirm the 0.7% QoQ forecasts, ahead of preliminary readings of Eurozone Employment Change for the second quarter (Q2), expected 2.5% versus 2.9% prior.  Also crucial will be the US Retail Sales for July, expected 0.1% versus 1.0% prior. Above all, the Federal Open Market Committee (FOMC) meeting minutes appear as the key event of the day, as well as for the week.

It’s worth noting that the Minutes statement will be eyed to confirm another hawkish move in September despite the latest reduction in the inflation fears.

Technical analysis

EUR/USD bounces off 23.6% Fibonacci retracement of late May to mid-July downturn, around 1.0150, with the previous support from July, at 1.0245 now, likely to restrict immediate upside.

Additional important levels

Overview
Today last price 1.0174
Today Daily Change 0.0012
Today Daily Change % 0.12%
Today daily open 1.0162
 
Trends
Daily SMA20 1.0213
Daily SMA50 1.0318
Daily SMA100 1.0516
Daily SMA200 1.0889
 
Levels
Previous Daily High 1.0268
Previous Daily Low 1.0155
Previous Weekly High 1.0369
Previous Weekly Low 1.0159
Previous Monthly High 1.0486
Previous Monthly Low 0.9952
Daily Fibonacci 38.2% 1.0198
Daily Fibonacci 61.8% 1.0225
Daily Pivot Point S1 1.0122
Daily Pivot Point S2 1.0081
Daily Pivot Point S3 1.0008
Daily Pivot Point R1 1.0236
Daily Pivot Point R2 1.0309
Daily Pivot Point R3 1.0349

 

 

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