On the back foot ahead of ECB’s staff projections, trade woes. Upbeat US PPI data could knock-off EUR/USD to 1.1550 level.
The EUR/USD pair extends its choppy trend into the European session, unable to sustain the bounce once again above the 1.16 handle, as the bulls remain unnerved ahead of the ECB’s monetary policy meeting due tomorrow.
EUR/USD: All eyes on trade and ECB
Persistent demand for the US dollar amid looming US-China trade concerns and uncertainty over the trade talks between the US and Canada continues to keep the EUR/USD pair under pressure so far this Wednesday, with every upside attempt sold-off just ahead of the 1.1600 level.
The subdued trading seen in the spot is also driven by increased cautiousness heading into the European Central Bank (ECB) monetary policy meeting due tomorrow. According to the latest Bloomberg headlines, the ECB is likely to make downward revisions to the economic growth forecasts at its policy meeting.
On the other hand, stronger US fundamentals reinforced the Fed’s tightening plans and kept the sentiment around the buck somewhat buoyed. Looking ahead, attention now turns towards the US PPI data, which is likely to add to the USD strength, as a bigger-than-expected drop in the Eurozone industrial figures weighed further on the common currency. Eurozone July industrial production arrived at-0.8% versus -0.5% m/m expected.
EUR/USD Technical Levels
According to Slobodan Drvenica at Windsor Brokers, “upside potential exists and is supported by rising bullish momentum, with 30SMA required to hold. Break above 55SMA would generate an initial bullish signal, with break and close above thin daily cloud (spanned between 1.1649 and 1.1678 and is turning lower on Thursday) and falling 100SMA (1.1685), is needed to open way for attack at key barriers at 1.1733/50 (28 Aug high/late Aug lower platform). Alternatively, a bearish signal could be expected on close below 30SMA, which would unmask 1.1526 (10Sep low) and open way for further retracement of 1.1300/1.1733 ascend. Res: 1.1612; 1.1644; 1.1659; 1.1685. Sup: 1.1570; 1.1557; 1.1526; 1.1466.”