- EUR/USD is on the defensive, but holding above the 200-day moving average.
- Reports of US-China trade truce are boding well for the US Dollar.
- An above-forecast German CPI could yield a rally in EUR/USD.
EUR/USD is trading on the defensive at press time despite reports of US-China trade truce. As of writing, the currency pair is trading at 1.1360, representing 0.10 percent losses on the day.
South China Morning Post reported in Asia that the US and China have tentatively agreed to another truce ahead of the weekend's G-20 meeting. The news lifted the Asian stocks and pushed the JPY lower across the board, but did little to boost EUR/USD.
Greenback's resilience could be associated with the three basis point rise in the US 10-year yield. It is worth noting that easing of trade tensions between the US and China, if any, would also ease pressure on the US Federal Reserve to cut rates. Therefore, the talk of temporary US-China trade truce could continue to bode well for the US Dollar in the European session.
That said, EUR/USD's technical outlook is still bullish with the pair holding above the inverse head-and-shoulders neckline support (former resistance). Further, the pair continues to trade above the 200-day moving average at 1.1352, having defended the key support in the previous two days.
As a result, a big move to the higher side, possibly to Tuesday's high of 1.1412, could be seen if the preliminary German consumer price index for June blows past expectations. The data due at 12:00 GMT is expected to show the cost of living in Eurozone's biggest economy rose 0.1 percent month-on-month in June, having risen 0.2 percent in the preceding month.
Eurozone's key long-term market inflation gauge – the five-year, five-year breakeven forward rate – is already up 10 basis points since Draghi's speech on Tuesday. The gauge would rise further if the German inflation data prints above estimate, weakening the case for an early European Central Bank rate cut and pushing the EUR higher across the board.
The pair, however, will likely find acceptance below the 200-day MA if the German data misses expectations by a big margin. Post-German data, the focus would shift to the third and final version of the US first-quarter gross domestic product, scheduled for release at 12:30 GMT.
Pivot levels
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
EUR/USD retreats to 1.0750, eyes on Fedspeak
EUR/USD stays under modest bearish pressure and trades slightly near 1.0750 on Wednesday. Hawkish comments from Fed officials help the US Dollar stay resilient and don't allow the pair to stage a rebound.
GBP/USD struggles to hold above 1.2500 ahead of Thursday's BoE event
GBP/USD stays on the back foot and trades in negative territory below 1.2500 after losing nearly 0.5% on Tuesday. The renewed US Dollar strength on hawkish Fed comments weighs on the pair as market focus shifts to the BoE's policy announcements on Thursday.
Gold fluctuates in narrow range below $2,320
After retreating to the $2,310 area early Wednesday, Gold regained its traction and rose toward $2,320. Hawkish tone of Fed policymakers help the US Treasury bond yields edge higher and make it difficult for XAU/USD to gather bullish momentum.
SEC vs. Ripple lawsuit sees redacted filing go public, XRP dips to $0.51
Ripple (XRP) dipped to $0.51 low on Wednesday, erasing its gains from earlier this week. The Securities and Exchange Commission (SEC) filing is now public, in its redacted version.
Softer growth, cooler inflation and rate cuts remain on the horizon
Economic growth in the US appears to be in solid shape. Although real GDP growth came in well below consensus expectations, the headline miss was mostly the result of larger-than-anticipated drags from trade and inventories.