EUR/USD Choppy Session Continues – Brace for a Breakout
Arslan Butt • 2 min read
During the Asian trading hours, the EUR/USD currency pair was moving near the daily low below 1.13 level and held the lower ground around 1.1285 on the back of the Industrial Production figures from Germany, which showed a deeper reduction in April. Despite the depressive German industrial figures, EUR/USD did not face any new losses at least for now due to the risk-on market sentiment. The pair is trading at 1.1288 and consolidating in the range between 1.1281 and 1.1320.
Germany’s Industrial Production showed a deeper contraction in April, as per today’s official data report. Whereas, the report hinted that the manufacturing recession in Europe’s largest economy was worsening. The industrial output reached -17.9% vs. a -15.5% drop expected and -9.2% previous. Annually, the German industrial production came at -25.3% in April against -11.6% booked in March.
This data normally measures the change in outputs of the German factories and mines. However, industrial production changes are broadly followed as an important indicator of strength in the manufacturing sector. Therefore, high figures are considered as positive (or bullish) for the shared currency. Likewise, low figures are seen as negative (or bearish).
The shared currency did not give any major attention to the data at least for now, but later the currency pair could extend its losses from three-month highs of 1.1384 to post-NFP lows of 1.1279.
At the USD front, the broad-based US dollar drew offers on the day as investors withdrew their money from the safe-haven assets after the US released a better-than-expected employment report on Friday, which eventually turned on the risk sentiment and became a key factor that kept a lid on any additional losses in the pair, at least for now.
The upbeat trading sentiment was further bolstered by the growing optimism about a global economic recovery from Coronavirus COVID-19 which also made safe-haven assets weaker. Whereas, the US Dollar Index that tracks the greenback against a basket of other currencies dropped 0.05% to 96.873 by 11:51 AM ET (4:51 AM GMT).
Looking forward, market participants will keep their eyes on ECB President Lagarde’s Speech for a critical direction. The German Trade Balance and French Trade Balance will also be closely observed. Apart from this, the major attention will be given to US-China updates & Coronavirus concerns for fresh impetus.
Daily Support and Resistance
Pivot Point 1.1318
EUR/USD is also developing a bearish trend in the wake of a stronger greenback. At the moment, the pair is facing immediate support around 1.1284 level and closing of candles beneath this mark, and it may lead it below 1.1244 support level. The 50 EMA level extends this support level. On the higher side, resistance operates at 1.1315 level today. Likelihoods of bearish bias persist strong, so let’s look for staying bearish below 1.1370 level.