- US-China trade war kick-in, US dollar takes a beating across the board.
- Risk trends to drive EUR markets ahead of the US NFP.
The EUR/USD pair finally managed to regain the 1.17 handle, as the US dollar got sold-off into the US-China trade war that official kicked-in today, with China said to have started retaliation to the US tariffs imposition.
A turnaround in the risk conditions was witnessed as the US tariffs took effect, with the US dollar broadly offered amid an increased appetite for risk assets such as the Antipodeans, oil and equities.
Further, a solid upturn seen in the German industrial output also collaborated to the renewed upside in the major. German Industrial Production (M/M) May arrived at 2.6% versus 0.3% expected and -1.0% last.
Meanwhile, the sentiment around the greenback may sour further, should the risk-on market profile extend into the European stock markets, which could help further upside in the spot beyond the 1.1700 levels.
The pair could get also influenced by the US non-farm payrolls data due later today at 1230 GMT. However, the reaction to the data is expected to be short-lived, as the trade war reality may overshadow the macro news.
EUR/USD Technical Levels
Karen Jones, Analyst at Commerzbank, notes: “EUR/USD is recovering in its range but faces strong near-term overhead resistance at 1.1723/25 and while this holds attention remains on the 1.1510/08 supports (recent lows). However, the market does look like it is attempting to base and a move above 1.1725 will signal another shot at the June high at 1.1853/55. Currently, risks are evenly balanced. Medium to longer term we continue to target the 200-week ma at 1.1394. We would expect this to hold the initial test and provoke some profit taking. Below 1.1394 would introduce scope to the 61.8% retracement at 1.1186. Above 1.1855 we look for a deeper retracement to the 1.1914 55 week ma.”
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