19 July 2019, GKFX – The shared currency is trading on the back footing at the end of the week, forcing EURUSD to recede from recent tops and trade in the 1.1260 region.
Eurusd capped by the 21-day sma near 1.1280
Yesterday’s bull run has failed once again at the 1.1280/90 region, where coincide last week’s tops and the key 21-day SMA.
Spot managed to reverse the pessimism on Thursday after dovish comments from FOMC’s J.Williams, which fuelled further speculations of a rate cut by the Federal Reserve later this month.
The subsequent bout of selling pressure in the buck eclipsed previous weakness in the European currency in response to news that the ECB could revamp its inflation target.
EUR is also deriving some weakness from another negative result in the German docket, where Producer Prices contracted 0.4% MoM in June and rose 1.2% from a year earlier, both prints coming in short of forecasts.
Later in the day, EMU’s Current account figures are due, while the U-Mich index is only expected across the pond.
WHAT TO LOOK FOR AROUND EUR
The inability of the pair to clear the important resistance area in 1.1280/90 has encouraged sellers to return to the markets, triggering the recent test of the 1.1200 neighborhood, where some support appears to have resurfaced.
Further out, occasional bullish attempts should be seen as a short-lived against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts (July/September), the resumption of the QE programme and changes in the forward guidance.
Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.
EURUSD technical analysis
At the moment, the pair is retreating 0.16% at 1.1258 and faces immediate contention at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the upside, a breakout of 1.1286 (high Jul.11) would target 1.1317 (200-day SMA) en route to 1.1412 (high Jun.25).
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