EUR/USD Looking Lower As It Gets Comfortable Below 1.0950
EUR/USD made a bearish reversal about a month ago, after reaching a high of 1.1277, where sellers stepped in. They have been pushing the price down since then and last week they pushed the price below 1.10, which opened the door for further declines. Moving averages have turned into resistance now and they taking turns to push the highs lower, which is another bearish sign.
The EUR/USD is rising on Tuesday, recovering modestly from monthly lows. The pair hit a fresh daily high at 1.0953 and is hovering around 1.0940 as the upside remains limited after US data. Yesterday we saw a retrace higher on the H4 chart, following the release of retail sales figures. Initially, the USD jumped higher briefly, sending EUR/USD down below 1.09. However, we saw a quick turnaround and this pair rebounded to climb above 1.09.
But the US Dollar regained its strength and resumed the uptrend which follows a strong performance during this week. After all, the retail sales numbers were quite strong, with the headline number increasing by 0.7% in July, exceeding expectations of 0.4%. Today the second reading for the Q2 Eurozone GDP were released, although they are not helping the Euro much.
The Eurozone Q2 GDP second estimate remained unchanged at +0.3% vs +0.3% in the prelim reading. This matches the initial estimates and is a bit of a surprise given how downbeat the recent economic data has been. Eurostat does note that there could be an outlier though, with Irish GDP jumping by 3.3% – driven by the taxation reasons, which is seeing an oversized impact among big foreign companies located in the country. I’ll just take that at face value.
In any case, we know that the euro area economy is stuttering hard as we enter Q3 and the outlook certainly doesn’t look bright at the moment. So we continue to remain bearish on EUR/USD and are selling retraces higher against moving averages.
EUR/USD Live Chart
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