EURUSD Price Outlook Remains Weak After Fresh Bearish Data
EURUSD Pointing South
- German factory orders fall again, Eurozone investor confidence slumps.
- US dollar remains strong leaving EURUSD eyeing further losses.
EURUSD Remains Under Downside Pressure
The latest batch of German/Eurozone data confirms the ongoing weakness in the area with Germany likely to fall into a technical recession – two quarters of negative growth – after German factory orders missed lowly expectations and fell further into negative territory. Recently released Eurozone investor confidence also ploughed further into negative territory, hitting a six-year low, further fueling fears of a recession despite the recent ECB rate cut and fresh quantitative easing package. German industrial production data out tomorrow and German export figures out on Wednesday will likely confirm this negative picture.
While the Euro remains weak, the US dollar continues to push higher despite a 0.25% rate cut being nearly fully priced-in at this month’s FOMC meeting. The US dollar remains bid regardless of the ongoing trade war with China and talk of US President Donald Trump being impeached. The technical set-up shows the firm upward trend in the dollar off the late-June low at 95.70 with a pattern of unbroken higher highs and higher lows in place. The US dollar basket is also back above the 20-day moving average highlighting the recent bullish momentum.
US Dollar Basket Price Chart (January – October 7, 2019)
In contrast, the daily EURUSD chart continues to point to the downside with a series of lower highs and lower low evident. The market is neither overbought or oversold and the pair are struggling to break above the 20-day moving average. Horizontal support is seen at 1.0926 ahead of 1.0879, a low last seen in May 2017. To the upside, there is a zone of resistance between 1.100 and 1.1025 before 1.1107 comes into play.
The latest Commitment of Traders report shows that traders have increased their bearish bets against the Euro by USD 650 million to over USD 9 billion, the largest short position since June this year.
EURUSD Daily Price Chart (January – October 7, 2019)
IG Client Sentiment shows that traders are 58% net-long EURUSD, a bearish contrarian bias.
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