Fibonacci Retracement Levels
The EUR/USD closed at $1.1791 after placing a high of $1.1805 and a low of $1.1791. The EUR/USD reversed and turned green for the day amid the renewed weakness in the U.S. dollar. After the release of U.S. consumer sentiment data in August, the greenback started declining and reached the 92.47 level and the U.S. Treasury Yield on the benchmark 10-year note also declined to 1.280%. The prices of greenbacks suffered amid concerns that the Fed might not start tapering sooner after U.S. consumer sentiment declined in August.
Apart from the weakness of the U.S. dollar, the single currency euro was also strong on Friday amid the better-than-expected macroeconomic data release from the bloc. The single currency was also strong in the market as the European Central Bank announced its plans to reduce its pandemic-related asset purchases in the next quarter.
The news that the ECB will start tapering asset purchases in the 4th quarter of 2021 added strength to the Euro and pushed EUR/USD higher on board. The central bank said that as the eurozone economy was growing at its fastest pace on record and inflation was set to rise further, the pressure on the bank was increasing day by day to taper its Pandemic Emergency Purchase Programme. The rising strength of the Euro versus the U.S. dollar pushed EUR/USD higher on Friday and turned it green for the day.
On the data front, at 11:00 GMT, the German WPI in July rose to 1.1% against the forecasted 0.9% and supported the single currency Euro and added further gains to EUR/USD. At 11:45 GMT, the French Final CPI for July remained flat with projections of 0.1%. The Trade Balance from June showed a surplus of 12.4B against the forecasted 10.9B and supported the single currency Euro and pushed EUR/USD higher.
From the U.S. side, at 17:30 GMT, the Import Prices for July declined to 0.3% against the anticipated 0.6% and weighed on the U.S. dollar and added further gains to the EUR/USD pair. At 19:00 GMT, the Prelim UoM Consumer Sentiment from August also dropped to 70.2 against the projected 81.2 and weighed on the U.S. dollar and pushed EUR/USD higher on board. Prelim UoM Inflation Expectations fell in August to 4.6% against the previous 4.7%.
Meanwhile, the new variants of the coronavirus remain a threat to the global economy. However, with successful vaccination drives, most European countries have lowered their public health risks and the likelihood of further lockdowns. This optimism also supported the single currency euro and kept EUR/USD prices higher for the day. Whereas, the U.S. dollar remained weak for the day not only because of the dismal economic data but also because of the rising number of coronavirus cases globally despite the vaccination rollout throughout the globe.
EUR/USD Intraday Technical Levels
Pivot Point: 1.1796
EUR/USD - Technical Outlook
On Monday, the EUR/USD is trading at 1.1744 with a bullish bias. The pair has reversed after falling into the oversold zone, and is now trading above the 1.1706 support level. The resistance level for the EUR/USD pair is around 1.1753, and a bullish crossover of this level could expose the pair to the 1.1765 and 1.1799 levels. On the 4-hour timeframe, these levels are extended by 38.2 percent and 61.8 percent Fibonacci retracement, respectively. The 50-day simple moving average remains far away at 1.1799, indicating a selling trend in the EUR/USD pair. While the MACD is also below zero, indicating a bearish bias in the market. Today, investors' primary focus will be on the German Buba Monthly Report, which may spark additional market price action. All the best.
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