EUR/USD remains below 1.11 despite US curve inversion, slide in US-German yield spread


  • EUR/USD is flashing red for the third straight day despite the US yield curve inversion.
  • The narrowing of the US-German yield spread is being ignored by the market.
  • Below-Forecast German consumer confidence will likely hurt the EUR.

EUR/USD remains on the defensive below 1.11 ahead of the London open despite the US yield curve inversion and the slide in the US-German yield spread to the lowest level since the first quarter of 2018.

The US yield curve inversion deepened on Tuesday with the spread between the 10-year and the two-year yields falling to -5 basis points, the lowest level since 2007. Curve inversions have preceded US recessions in the past 50 years.

Further, the spread between the US and German 10-year bond yields fell to an 18-month low of 218 basis points.

Even so, the EUR/USD fell 0.10% on Tuesday and closed below 1.11. The price action indicates the market focus has shifted to the prospect of the aggressive European Central Bank (ECB) easing in September.

As a result, the common currency may suffer a deeper drop today. EUR/USD could revisit the Aug. 23 low of 1.1052 if the German Gfk Consumer Confidence (Sep) prints well below the consensus estimate of 9.36. The data is scheduled for release at 06:00 GMT.

An above-forecast data may put a bid under the EUR. The technical outlook, however, would turn bullish only if the pair finds acceptance above the Aug. 6 high of 1.1250. As of writing, the pair is trading at 1.1088, representing marginal losses on the day. 

Technical levels

EUR/USD

Overview
Today last price 1.1088
Today Daily Change -0.0002
Today Daily Change % -0.02
Today daily open 1.109
 
Trends
Daily SMA20 1.1133
Daily SMA50 1.1205
Daily SMA100 1.1211
Daily SMA200 1.1282
Levels
Previous Daily High 1.1116
Previous Daily Low 1.1086
Previous Weekly High 1.1154
Previous Weekly Low 1.1052
Previous Monthly High 1.1373
Previous Monthly Low 1.106
Daily Fibonacci 38.2% 1.1097
Daily Fibonacci 61.8% 1.1105
Daily Pivot Point S1 1.1078
Daily Pivot Point S2 1.1067
Daily Pivot Point S3 1.1048
Daily Pivot Point R1 1.1109
Daily Pivot Point R2 1.1128
Daily Pivot Point R3 1.114

 

 

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