• General sentiment is that the ECB will begin tapering asset purchases in the fourth quarter of 2021 – this boosted the value of the Euro.
• German WPI jumped to 1.1 percent in July, up from the anticipated 0.9 percent, bolstering the single currency Euro.
• Traders may consider taking a sell trade below 1.1800, with a take profit at the 1.1775 and 1.1746 levels.

On Monday, the EUR/USD pair is trading with a bearish bias at the 1.1780 level. After hitting a high of $1.1805 and a low of $1.1791, the EUR/USD ended the day at $1.1791 on Friday. In response to continued weakness of the US dollar, the EUR/USD pair reversed, turning green for the day.

The greenback began to fall after the release of the August consumer confidence data. It reached 92.47, while the benchmark 10-year Treasury Yield fell to 1.280 percent. Concerns that the Fed might not start tapering sooner after the drop in the US Consumer Sentiment in August weighed on the value of the greenback.

Apart from the weakness of the dollar, the single currency Euro was also strong, owing to the bloc’s release of better-than-expected macroeconomic statistics. The Euro gained ground in the market after the European Central Bank indicated lowering its pandemic-related asset purchases in the coming quarter.

The announcement that the ECB will begin tapering asset purchases in the fourth quarter of 2021 boosted the Euro, pushing the EUR/USD higher. The central bank stated that the Eurozone’s economy had grown at the quickest rate on record. While inflation was expected to climb further, the pressure on the bank to cut its Pandemic Emergency Purchase Program was mounting day by day. On Friday, the increasing strength of the Euro versus the US dollar pushed the EUR/USD higher, turning it green for the day.

German WPI jumps to 1.1 percent in July

On the data front, the German WPI jumped to 1.1 percent in July, which was up from the anticipated 0.9 percent. This bolstered the single currency Euro and added to the gains in the EUR. The French Final CPI for July, that came in at 11:45 GMT, was unchanged compared to expectations of 0.1 percent. At 14:00 GMT, the release of the June Trade Balance revealed a surplus of 12.4 billion dollars, vs. an anticipated 10.9 billion dollars, which boosted the single currency Euro and pushed the EUR/USD higher.

At 17:30 GMT, the US Import Prices for July came in, reflecting a drop to 0.3 percent, which was down from the expected 0.6 percent. This weighed on the US dollar and added to the advances in the EUR/USD pair. At 19:00 GMT, the August Prelim UoM Consumer Sentiment fell to 70.2, below the expectations of 81.2, while in August, Prelim UoM Inflation Expectations decreased to 4.6 percent, which was lower than the 4.7 percent in July.

New coronavirus variants remain a threat to the global economy. However, health concerns have subsided in most European countries, reducing the chance of subsequent lockdowns, thanks to effective vaccination campaigns. This upbeat mood boosted the value of the single currency Euro, pushing the EUR/USD prices higher for the day. On the other hand, it remained weak for the day, due to the poor economic statistics and the rising number of coronavirus cases worldwide, despite widespread immunization.

EUR/USD – Technical Outlook – Downward Trendline Resistance at 1.1800

On Monday, the EUR/USD is trading at 1.1744, with a bullish bias. After dipping into the oversold zone, the pair has turned around and is presently trading above the 1.1706 support level. The resistance level of the EUR/USD pair is at 1.1753, and a bullish crossover at this level might expose the pair to levels of 1.1765 and 1.1799. 

These levels are stretched by 38.2 percent and 61.8 percent Fibonacci retracement on the 4-hour chart, respectively. The EUR/USD pair’s 50-day SMA (simple moving average) remains far off, at 1.1799, suggesting a selling trend. 

The MACD is well below zero, signaling a market with a bearish tendency. Thus, traders may consider taking a sell trade below 1.1800, with a take profit at 1.1775 and 1.1746. Today, investor attention will be drawn to the German Buba Monthly Report, which may prompt further market price movement. Good luck!