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

Latest Forex News

Editors’ Picks

EUR/USD clings to 3.5-week’s high, trades above 1.1000 figure

The pair is challenging the 1.1047 resistance. EUR/USD bull recovery from 34-month lows remains intact. Further coronavirus headlines are awaited.

EUR/USD News

GBP/USD hits new 2020 low and bounces amid Brexit rhetoric, coronavirus headlines

GBP/USD is trading above 1.2800 after hitting a new 2020, nearing the 1.2700 figure, as concerns about a no-trade-deal Brexit are weighing on the pound. Modest recovery seen in USD during the American session keeps the bearish pressure intact.

GBP/USD News

XAU/USD tumbles near two-week’s lows, sub-$1600/oz

Gold has been dropping sharply this Friday while reaching the 200 SMA on the four-hour chart. XAU/USD bulls gave up as sellers took the market down sharply. The bears seem to be in charge and more down could potentially be expected. 

Gold News

WTI remains under pressure around $45.00

Nothing new around crude oil prices, with rising concerns on the Chinese COVID-19 and its potential impact on the economy and the demand for the commodity keeping traders’ sentiment well depressed.

Oil News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex MAJORS

Cryptocurrencies

Signatures