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.

GBP/USD clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.