EUR/USD analysis: EUR buyers becoming more courageous
|EUR/USD Current price: 1.1625
- EUR supported by news indicating that Germany wants the ECB to end with the low-rate cycle.
- USD demand eases despite risk aversion sent equities nose-diving in Europe.
Tensions that ruled the market begun easing mid-European morning, as speculative interest seemed less concerned about the situation in EM. Sentiment improved sharply on headlines indicating that the UK and Germany decided to abandon some crucial demand over Brexit in order to facilitate an agreement. The EUR/USD pair, which traded as low as 1.1542 early London session, jumped to 1.1640, as the greenback lost its safe-haven attractive. Germany later denied the header, putting a halt to dollar's decline against the common currency. Meanwhile, Fed's Bullard said that he sees an elevated risk of Fed's current policy causing recession.
The EUR/USD pair hold on to intraday gains above the 1.1600 level, despite renewed Brexit fears and the collapse of local share markets. Data coming from the EU was mixed as most of the final versions of Markit Services and Composite PMI in the region suffered downward revisions. However, for the whole EU, the services sector index came in at 54.4, as expected, while the composite one resulted at 54.3, better than the previous estimate of 53.5. EU Retail Sales fell as expected 0.2% in July. Lending support to the common currency were early headlines indicating that Germany wants the ECB to end with the low-rate cycle. This Thursday, the macroeconomic focus will be on US employment figures, as beside the usual weekly unemployment figures, the country will release the ADP employment Change for August, and Q2 Nonfarm Productive and Labor Costs.
The EUR/USD pair keeps recovering after nearing the 50% retracement of its August rally, but so far remains unable to clear the 23.6% retracement of the same rally at around 1.1630. The upside potential seems limited according to technical readings in the 4 hours chart, given that technical indicators have lost upward strength right after entering positive territory, now flat within neutral readings. In the same chart, the pair is developing above all of its moving averages that also lack directional strength. A strong static resistance level is 1.1660, with a bullish extension becoming more likely on a break above it, while below 1.1530, the weekly low, the risk will skew to the downside.
Support levels: 1.1590 1.1550 1.1530
Resistance levels: 1.1630 1.1660 1.1700
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