- EUR/USD struggles to extend the latest pullback, triggered mainly due to renewed trade optimism and downbeat German data.
- Headlines concerning the US-China relations renew risk-off while political talks at Italy show nearness to an agreement on alliance formation.
- German GDP, US Consumer Confidence and Richmond Fed Manufacturing Index decorate the economic calendar.
While fresh risk-on and downbeat German data dragged the EUR/USD pair down on Monday, latest trade/political news holds the quote tightly around 1.1100 during early Tuesday.
Among them doubts over the recent optimism surrounding the US-China relations take the center. The Global Times’ Chief Editor doubted any good calls from China to the US President Donald Trump, as he claimed yesterday, while Xinhua quoted the People’s Bank of China’s (PBOC) Governor while pushing for new loans, which in turn signals weaker Yuan rate that has been irritating the US President since long.
From the US, the Union Leader piece mentions that the US senators are warning the key Trump administration officials to not invest pension funds in Chinese markets.
Elsewhere, talks between Italy’s Democratic Party (PD) and the anti-establishment Five Star Movement (M5S) continues with doubts over top positions and budget still limiting the PD and M5S from an announcement of the alliance.
With this, the US treasury yields lost their latest recovery with the 10-year note close to 1.527% by the press time.
Moving on, Germany’s Gross Domestic Product (GDP) for the second quarter (Q2) of 2019 and the US numbers for housing, Consumer Confidence and the Richmond Fed Manufacturing Index will be on the traders’ lookout. It should, however, be noted that any announcement concerning the US-China trade relations will also direct near-term market sentiment.
Technical Analysis
FXStreet Analyst Flavio Tosti spots 50-bar simple moving average (SMA) on the four-hour chart and 200-bar SMA on the 30-minute chart, coupled with technical confluences indicator, to portray pair’s sideways momentum:
The Fiber is challenging the 1.1098 support and the 50 SMA. A break below this level can lead to a drop towards the 1.1080 level, according to the Technical Confluences Indicator. EUR/USD is challenging the 200 SMA (on 30 min chart). If bulls step in, they can drive the market towards 1.1115 and 1.1134 resistances.
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