EUR/USD: On the defensive ahead of German GDP and US CPI release

The rejection at the bearish 5-day SMA indicates the EUR is on the defensive below 1.13.
An above-forecast German and Eurozone GDP may be of little help as Italy-EU standoff continues.
The currency pair looks set to create another lower high around 1.13 if the US CPI betters estimates, reinforcing the Fed's calls for restrictive interest rate policy.

Omkar Godbole FXStreet Contributor

The EUR/USD is currently flatlined at 1.1290, having clocked a high of 1.1321 in Asia.

The failure to hold onto gains above the downward sloping (bearish) 5-day simple moving average (SMA) validates the bearish setup indicated by the series of lower highs and lower lows and the negative crossover between the 5-, 10-day SMAs.

So, it seems safe to say that the pair is on the defensive ahead of the key data releases - German and Eurozone GDP and US CPI.

German data, in particular, is likely to show the economy contracted 0.1 percent quarter-on-quarter in the September quarter, following a 0.5 percent expansion in the second quarter. An above-forecast reading may put a bid under the EUR. The resulting gains, however, could be short-lived as Italy has defied the European Commission (EC) by sticking to its big-spending budget plan.

In response, the EU may initiate the excessive deficit procedure, in which case the Italian government bond yields could rise sharply in the EUR-negative manner.

Further, the EUR/USD could drop sharply if the US consumer price index (CPI), due today at 13:30 GMT, beats estimates by a big margin, forcing markets to price in the prospects of restrictive (above-neutral interest rates) monetary policy in the US.

The bearish pressure, however, would weaken if the EUR somehow manages to climb the descending 10-day SMA.

EUR/USD Technical Levels

EUR/USD

Overview:
    Last Price: 1.1292
    Daily change: 7.0 pips
    Daily change: 0.0620%
    Daily Open: 1.1285
Trends:
    Daily SMA20: 1.1394
    Daily SMA50: 1.1527
    Daily SMA100: 1.157
    Daily SMA200: 1.1829
Levels:
    Daily High: 1.1294
    Daily Low: 1.1216
    Weekly High: 1.15
    Weekly Low: 1.1316
    Monthly High: 1.1625
    Monthly Low: 1.1302
    Daily Fibonacci 38.2%: 1.1264
    Daily Fibonacci 61.8%: 1.1246
    Daily Pivot Point S1: 1.1236
    Daily Pivot Point S2: 1.1186
    Daily Pivot Point S3: 1.1157
    Daily Pivot Point R1: 1.1314
    Daily Pivot Point R2: 1.1344
    Daily Pivot Point R3: 1.1393

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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