- Off-highs, but manages to hold 1.1600 heading into a light EUR calendar.
- Technical set up points to further corrective gains.
The rebound in the EUR/USD pair from multi-week troughs fizzed near 1.1630 region, as the bulls take a breather and await the US CPI figures for the next push higher.
In today’s trading so far, the spot moved-off four-day highs but clings to gains above the 1.16 handle, as the US dollar weakness continues to persist, despite escalating US-China trade dispute.
Reuters reported earlier today, "the United States will begin collecting tariffs on another $16 billion in Chinese goods on Aug. 23, the U.S. Trade Representative’s office said on Tuesday as it published a final tariff list targeting 279 import product lines.”
On the EUR-side of the equation, the gains may appear capped amid a revival of the political concerns surrounding Italy while weaker German 10-year yields could also keep the corrective rally limited. However, amid a lack of fresh fundamental drivers from Euroland, broad-based US dollar pullback will continue to buoy the sentiment around EUR/USD ahead of the speech by the FOMC member Barkin scheduled at 1245 GMT.
EUR/USD Technical Levels
According to Karen Jones, Analyst at Commerzbank, “EUR/USD has broken down from its converging range and still targets the 1.1510/08 May and June lows even though it is short-term heading back up towards the 55-day moving average at 1.1667. The cross remains offered below the past couple of weeks’ highs at 1.1745/50. Below recent lows at 1.1530/08 sits the 50% retracement of the 2017- 18 rise at 1.1448 as well as the 200-week moving average at 1.1367.”
“On the topside the key level is 1.1790, the July peak, a recovery above which would target the 38.2% Fibonacci retracement at 1.1855. Above 1.1855 we would look for a deeper retracement to the 55-week moving average at 1.1935 with scope for the 200-day moving average at 1.1976 to be touched as well. There we would suspect the cross tofail, though,” Karen adds.
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