EUR/USD hits fresh daily highs at 1.1230 and retreats
- EUR/USD fails to hold to gains and pulls back, remains in a consolidation range.
- Risk aversion and Italy’s political crisis among key drivers today.
The EUR/USD pair broke above 1.1225 during the American session and climbed to 1.1230 hitting a fresh daily high but if failed to hold and pulled back. It trades at 1.1215, modestly higher for the day and still moving in a 5-day range between 1.1160 and 1.1245.
Italy and risk sentiment
In Wall Street, the DOW JONES is down 0.92% and the NASDAQ 0.61%. “Markets remained cautious with the U.S.-China trade conflict showing no signs of abating, spurring fears over global growth and currency volatility. Trump downplayed expectations of holding a trade meeting with China in September. In this context, safe-haven assets remained in demand and bets of an aggressive Fed rate cut in September rose ahead of tomorrow’s U.S. CPI data”, said BBVA analysts.
They point out that the uncertainty lingering amid the ongoing trade conflict and the slowing global economy continued to add downward pressure on government bond yields. The move-in bonds favor the Swiss franc versus the Euro, pushing EUR/CHF under 1.0870, to the lowest in a week and closer to the multi-year lows.
The political crisis in Italy continues following Salvini’s decision to call for a snap election. Then pressured eased after Fitch Ratings affirmed the BBB grade with a negative outlook.
Despite all, range prevails
EUR/USD continues to trade in a consolidation range, as it has been the case since last Tuesday, moving between 1.1245 and 1.1160/70. Earlier today the pair tested the bottom of the range but rebounded sharply, approaching the top.
A firm break above 1.1245 would point to further gains while under 1.1160 will likely leave the pair vulnerable to a slide to 1.1110.
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
