EUR/USD struggles to defend 1.1700 as German election polls challenge optimists

EUR/USD fades bounce off five-week low flashed last week.
German election polls challenge Angela Merkel’s reign, dim bloc’s economic reform hopes.
Risk-off mood underpins US dollar’s safe-haven demand, US Treasury yields cheer Fed tapering concerns.
US Durable Goods Orders, risk catalysts eyed for fresh impulse, updates from Germany, Evergrande are the key.

Anil Panchal FXStreet

EUR/USD bears remain at the loggerheads with the bulls after a three-week downtrend around 1.1720 amid early Monday morning in Asia. In doing so, the major currency pair remains pressured near August month’s low as fears over a political deadlock in Germany, the bloc’s powerhouse, challenge the economic recovery hopes.

As per the latest poll, Angela Merkel’s center-right Christian Democratic Union (CDU) lags a bit behind center-left Social Democrats (SPD). ''The center-left Social Democrats (SPD) were on track for 25.5% of the vote, ahead of 24.5% for Merkel's CDU/CSU conservative bloc, projections for broadcaster ARD showed, but both groups believed they could lead the next government,'' Reuters reported.

Although a coalition government is a sure outcome, SPD’s more power over Merkel’s resignation after 16 years of performance question the region’s future due to Germany’s powerhouse status. Reuters expressed the conditions while saying, “Nothing happens in Europe without German leadership, according to an old adage. That makes Sunday’s tight election in the region’s biggest economy particularly disconcerting.”

Read: German Elections Preview: Three EUR/USD scenarios for the post-Merkel dawn

Elsewhere, US Federal Reserve (Fed) policymakers reiterate tapering concerns and back the US 10-year Treasury yields to refresh a three-month top. Also favoring the US dollar are the concerns over China’s Evergrande and uncertainty over US budget allocations and the debt ceiling. Recently, US House Speaker Nancy Pelosi stepped back from her previous hints to put the stimulus bill on the House floor on Monday.

Amid these plays, equities manage to stay firmer on Friday while the S&P 500 Futures print mild gains by the press time.

In addition to the German Election updates, US Durable Goods Orders and the risk catalyst are also important to watch for near-term EUR/USD direction.

Read: US Durable Goods Orders August Preview: Retail Sales have led the way

Technical analysis

In addition to a downward sloping trend line from September 03, a convergence of 50-DMA and 20-DMA, respectively near 1.1760 and 1.1785, also challenges the EUR/USD buyers.

Additional important levels

Overview
Today last price	1.172
Today Daily Change	0.0000
Today Daily Change %	0.00%
Today daily open	1.172

Trends
Daily SMA20	1.1795
Daily SMA50	1.1786
Daily SMA100	1.191
Daily SMA200	1.198

Levels
Previous Daily High	1.1748
Previous Daily Low	1.1701
Previous Weekly High	1.1756
Previous Weekly Low	1.1684
Previous Monthly High	1.19
Previous Monthly Low	1.1664
Daily Fibonacci 38.2%	1.1719
Daily Fibonacci 61.8%	1.173
Daily Pivot Point S1	1.1698
Daily Pivot Point S2	1.1676
Daily Pivot Point S3	1.1651
Daily Pivot Point R1	1.1745
Daily Pivot Point R2	1.177
Daily Pivot Point R3	1.1792

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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