- Renewed USD strength and risk-on fuels the Asian decline.
- Bears look to re-test the 1.1535/30 support zone ahead of the US data.
Having consolidated briefly around the 1.1575 region in early Asia, the EUR/USD pair came under fresh selling pressure, as the US dollar recovery regained traction amid better risk appetite.
EUR/USD: Focus on US data
The common currency extends its weakness into a third day today versus its American rival, now pushing the EUR/USD pair towards the midpoint of the 1.15 handle. A break below the last will open floors for a test of the latest demand zone near the 1.1530 region.
The latest leg down in the spot can be mainly attributed to the resurgent USD demand across the board, as markets prefer to hold the US currency amid looming US-China trade concerns and divergent monetary policy outlooks between the Fed and global central banks.
On the EUR-side of the story, yesterday’s single currency jawboning by the ECB Governing Council member Nowotny continues to weigh negatively on the EUR while the German migration issue also remains a drag on the spot. Nowotny noted that he sees the Euro depreciating against the US dollar.
In the day ahead, the pair will continue to get influenced by the USD dynamics and risk trends in absence of fresh fundamental drivers in Europe. However, markets may keep an eye on the BOE interest rates decision for any rub-off effect on the Euro.
EUR/USD Technical Levels
Valeria Bednarik FXStreet’s Chief Analyst notes: “The short-term picture is neutral-to-bearish as the pair is unable to advance beyond a directionless 20 SMA in the 4 hours chart, while the Momentum indicator retreats from its mid-line as the RSI slowly advances, currently at 44. The mentioned 20 SMA provides a dynamic resistance at around 1.1595, although the upside will look more constructive on a break above 1.1644, so far the weekly high. Below 1.1550, on the other hand, the risk will turn toward the downside, exposing the yearly low of 1.1509. Support levels: 1.1550 1.1510 1.1460. Resistance levels: 1.1595 1.1645 1.1680.”
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