EUR/USD looks to close below 1.12 as USD preserves strength


  • Hopes of progress in US-China trade talks boost dollar.
  • Annual core CPI in US comes in slightly higher than market expectation.
  • Economic confidence both in Germany and eurozone deteriorates in August.

Despite the disappointing macroeconomic data releases from the euro area earlier in the day, the EUR/USD pair held above the 1.12 mark but came under strong bearish pressure in the second half of the day as the Greenback capitalized on the latest developments surrounding the US-China trade dispute. As of writing, the pair was trading at 1.1175, losing 0.33% on a daily basis.

The closely-watched ZEW Economic Sentiment Index in Germany slumped -44.1 in August to miss the market expectation of -21.7 by a wide margin. Similarly, the same reading for the eurozone plummeted to -43.6 from -20.3 in July. Commenting on the data, “The ZEW Indicator of Economic Sentiment points to a significant deterioration in the outlook for the German economy.," noted ZEW President Professor Achim Wambach.

"The most recent escalation in the trade dispute between the US and China, the risk of competitive devaluations, and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth. This will most likely put a further strain on the development of German exports and industrial production.”

USD gains traction on trade optimism

Although the broad-based USD weakness didn't allow the ZEW data to pull the pair lower, the US Trade Representative's office announced the Trump administration's decision to delay additional tariffs on some Chinese imports until December 15 helped the Greenback find demand and weighed on the pair.

The improved market sentiment on renewed trade optimism caused the US 10-year Treasury bond yield to rise sharply and supported the USD's recovery. Moreover, the probability of the Federal Reserve making an aggressive 50 basis points rate cut in September weakened to provide an additional boost to the currency. The US Dollar Index erased all of yesterday's gains and rose to a six-day high of 97.80.

Meanwhile, the data published by the US Bureau of Labor Statistics today showed that annual inflation, as measured by the core Consumer Price Index, rose to 2.2% in July and came in higher than the market expectation of 2.1%.

Tomorrow, economic growth figures from both Germany and the euro area will be watched closely by market participants. The real Gross Domestic Product in Germany is expected to contract by 0.1% in the second quarter and the shared currency is likely to meet a fresh selling wave if the data disappoint.

Technical levels to watch for

EUR/USD

Overview
Today last price 1.1176
Today Daily Change -0.0040
Today Daily Change % -0.36
Today daily open 1.1216
 
Trends
Daily SMA20 1.1174
Daily SMA50 1.1239
Daily SMA100 1.1225
Daily SMA200 1.1296
Levels
Previous Daily High 1.1232
Previous Daily Low 1.1162
Previous Weekly High 1.1251
Previous Weekly Low 1.1104
Previous Monthly High 1.1373
Previous Monthly Low 1.106
Daily Fibonacci 38.2% 1.1205
Daily Fibonacci 61.8% 1.1189
Daily Pivot Point S1 1.1174
Daily Pivot Point S2 1.1134
Daily Pivot Point S3 1.1105
Daily Pivot Point R1 1.1244
Daily Pivot Point R2 1.1272
Daily Pivot Point R3 1.1314

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD: Bulls need an upbeat German IFO Expectations figure

EUR/USD dips as lingering US-China tensions bode well for the US dollar. Technical indicators suggest scope for a re-test of the lower end of the multi-week trading range. Deeper losses may remain elusive if the German IFO numbers beat estimates. 

EUR/USD News

GBP/USD retraces three-day losses below 1.2200 on UK/US holiday

GBP/USD sellers catch a breather amid a lack of major catalysts on Spring Bank Holiday. UK PM Johnson gets criticized while favoring Adviser Dominic Cummings. US-China tussle intensifies with eyes on US President Trump’s reaction over the Hong Kong issue.

GBP/USD News

Is this the beginning of the end for Hong Kong's autonomy?

On Friday, the Chinese Communist Party unveiled details of a plan to impose national security laws on Hong Kong. The true colors of the authoritarian regime in China are at full display to the rest of the world.

Read more

Gold down by $6 in Asia, weekly chart shows bullish trend exhaustion

Gold, a safe-haven asset, is flashing red at press time even though the growth-linked currencies like the Aussie dollar are struggling to gain altitude. Technical charts indicate scope for deeper declines in the short-term.

Gold News

USD/JPY keeps mild gains above previous resistance line, 200-HMA

USD/JPY bounces off an immediate support line to print a three-day winning streak. Thursday’s high appears on the bulls’ radar as immediate resistance. 107.00 could lure the bears below 200-HMA.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures