EUR/USD: Flirting with confluence of key MAs ahead of Draghi speech
- The EUR reported losses in Asia, courtesy of risk-off sentiment and the resulting drop in EUR/JPY.
- The common currency is flirting with the confluence of 5-day and 50-day moving average (MA).
- Focus on Draghi's speech and equity markets.
Currently, the EUR/USD is reporting moderate losses around 1.1728 (confluence of 5-day MA and 50-day MA).
The currency pair was dragged lower by the EUR/JPY cross, which fell more than 50 pips, courtesy of escalating US-China trade tensions and the resulting risk aversion in the financial markets.
Focus on equities and Draghi
The cross driven sell-off in EUR/USD could gather pace if the European equities feel the pull of gravity in response to trade tensions.
Further, the EUR pairs could turn volatile during the European Central Bank (ECB) President Mario Draghi's speech. The central banker could reiterate that interest rates will remain at record lows for a long time.
US-German yield differential is rolling over in favor of the EUR bulls
The above chart shows the spread or the difference between the US 10-year yield and German 10-year yield is beginning to roll over in the EUR-positive manner. So, the downside in the EUR/USD could be limited.
EUR/USD Technical Levels
Resistance: 1.1746 (Asian session high), 1.1791 (July 9 high), 1.1852 (June 14 high),
Support: 1.1690 (previous day's low), 1.1651 (4H 100MA), 1.1616 (61.8% Fib R of 1.1508-1.1791).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
