EUR/USD reverses sharply from 1.1230, still holds the range
- Spot downed by fresh Treasury yields buying, downbeat ECB Bulletin.
- The Yuan recovery, dovish Fedspeak lend support to EUR/USD amid trade woes.
- Eyes US data, trade-related news, Trump comments for fresh impulse.
Following a steady recovery seen in the Asian trades, the EUR/USD pair witnessed an up and down European session so far, but the rates remain confined in the familiar trading range between 1.1200-1250 levels.
EUR/USD: Awaits fresh catalyst for a range breakout
The EUR/USD pair remains at the mercy of the price-action seen in the US Treasury yields, as it fades its latest uptick to 1.1229 highs after the Treasury yields’ rebound regained poise in Europe.
The US rates collapsed in the US last session after Chicago Fed President Charles Evans said economic headwinds mean cutting rates further could be reasonable. The greenback also tumbled broadly in sync with the yields.
Adding to the renewed weakness in the shared currency, the European Central Bank’s (ECB) Economic Bulletin mentioned that a “prolonged uncertainty is dampening economic sentiment”, adding that “data and survey information point to somewhat weaker eurozone growth in the coming quarters”. The sharp decline in the German June Industrial Production on Thursday also re-ignited fears of a deeper manufacturing recession in Europe’s largest economy.
However, the bulls continue to guard the 1.1200 barrier, as the Yuan recovery continues to offer support to the Euro. The Eurozone and German markets are heavily dependent on China for their exports. Therefore, markets believe that stabilizing Chinese currency could help somewhat ease Chinese growth concerns.
Attention now turns towards the US weekly Jobless Claims and fresh trade-related development for fresh direction on the prices, as markets eagerly await a range breakout.
EUR/USD Technical Levels
“EUR/USD needs to break above 1.1250 to unleash the next phase of the corrective rally, which began from lows near 1.1027 on Aug. 1. A close above 1.1250 would invalidate bullish exhaustion or indecision signaled by the consecutive daily Doji candles and open the doors to levels above 1.13. On the other hand, a daily close below 1.1167 – the low of Tuesday’s Doji candle – would imply an end of the corrective bounce from lows near 1.1027 and shift risk in favor retest of that level,” FXStreet’s Analyst, Omkar Godbole, notes.