EUR/USD ANALYSIS & TALKING POINTS
- Strong US economic data overshadows EZ GDP.
- FOMC minutes now in focus.
- Long wick candles don’t look good for the euro.
EURO FUNDAMENTAL BACKDROP
The euro advanced throughout the European trading session after the euro area GDP report showed a marginal increase on the QoQ print (see economic calendar below). MoM industrial production added to the optimism while YoY figures surprised to the upsides relative to expectations although decreasing by 1.2%.
From a US perspective, building permits data came in mixed with housing starts beating forecasts while permits fell short of estimates. Industrial production ticked higher after falling in the prior two months alongside a rise in manufacturing production. Today’s US economic data has augmented yesterday’s strong retail sales figures and could keep the Fed on its toes in terms of maintaining higher rates for longer as data continues to echo a strong US economy.
Later today, the FOMC minutes (July) are scheduled that should not provide any surprises, rather a reiteration of quelling any short-term expectations of easing monetary policy.
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EUR/USD ECONOMIC CALENDAR (GMT +02:00)
Source: DailyFX economic calendar
TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Daily EUR/USD price action shows several long upper wicks (including today’s candle) that could hint at subsequent downside to come. Robust US data is making it difficult for bulls to defend the 1.0900 psychological handle and a break below could retest the upward channel’s support (black). According to the Relative Strength Index (RSI), there is still room for the pair to fall further before reaching oversold territory.
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Resistance levels:
- 1.1000
- 50-day moving average (yellow)
Support levels:
- 1.0900
- 1.0834/Channel support
IG CLIENT SENTIMENT DATA: BEARISH
IGCS shows retail traders are currently neither NET LONG on EUR/USD, with 55% of traders currently holding long positions (as of this writing). Download the latest sentiment guide (below) to see how daily and weekly positional changes affect EUR/USD sentiment and outlook.
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Contact and followWarrenon Twitter:@WVenketas
