After a brief phase of consolidation near two-week tops of 1.1880 in early Europe, the EUR/USD pair finally broke to the downside and extended the retreat to test mid-1.18.
EUR/USD down to test 1.1850
The spot is last seen trading near 1.1860 region, defending minor bids amid broad based US dollar recovery. The USD index attempted a tepid bounce from two-week troughs of 92.64 and now flirts with session highs reached at 92.78 levels.
The latest leg lower in the major can be also attributed a bout of profit-taking ahead of the key US inflation data and ECB President Draghi’s speech. US PPI data will draw special attention, after the FOMC minutes showed that a majority of the members believe that the inflationary factors are not just transitory.
Meanwhile, markets remain wary over the impending decision over the Catalan’s independence, after the Spanish PM Rajoy gave the Catalan government eight days to take a call on the Catalonia’s independence, failing which Rajoy call a snap regional election after activating Article 155 of the constitution, which would allow him to sack the Catalan regional government.
The immediate focus now remains on the Eurozone industrial production data for fresh trading impetus on the Euro.
EUR/USD Technical View
Karen Jones, Analyst at Commerzbank wrote: “EUR/USD continues to see a rebound from the 1.1662 August low. Initial resistance at 1.1833, the end of September high and 20 and 55 day moving averages have been eroded and we would allow for an extension to the 1.1910/25 resistance line and 2nd August high, where we think it will struggle, this guards the 1.2092 high. We would treat a break below 1.1660 as the trigger for a sell off to the mid-June high at 1.1296 and the more important 1.1110 end of May low”.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.