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EUR/USD: 1.1100 in Danger

EUR/USD has been struggling after upbeat US data. Traders are gearing up to a hectic week in the US and also in Europe. Monday's technical chart is pointing to further losses for EUR/USD.
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FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market and was founded in 2000. The website offers a wide range of tools and resources: 24/5 currency news, real-time economic calendar, advanced rates and charts, educational webinars, analysis reports, forecasts, Learning Center, newsletters, industry services, FX customizable studies… As its distinctive trademark, the portal has always been proud of its unyielding compromise to provide neutral and unbiased information and to enable its users to take better and more confident decisions. FXStreet has managed to gain the collaboration of the entire Forex industry, from individual professionals and small companies right up to Forex Brokers and Investment Banks. FXStreet covers the FX Market 24/5: an expert team of journalists, traders and economists picture what the market is doing and what is happening as it happens. Besides the main website in English, the portal is available in 16 other languages (English, Japanese, Simplified Chinese, Traditional Chinese, Spanish, Russian, Arabic, Turkish, Indonesian, Portuguese, German, French, Italian, Hungarian and Vietnamese, Korean and Catalan). FXStreet was short listed as “Best e-FX initiative of the year (vendor)” for the FX Week e-FX Awards 2010.
  • EUR/USD has been struggling after upbeat US data.
  • Traders are gearing up to a hectic week in the US and also in Europe.
  • Monday’s technical chart is pointing to further losses for EUR/USD.

When a currency pair is unable to recapture its previous support line – it has one direction – down. EUR/USD has been sliding once again after failing to extend its post-Draghi bounce. The main driver for the recent downfall has been the upbeat US Gross Domestic Product (GDP) report on Friday. The world’s largest economy reported an annualized growth rate of 2.1% in the second quarter – above expectations. Moreover, economists were pleased that the US consumer drove the economic expansion in the spring after a slowdown earlier.

The upbeat US economic figures have reduced expectations for significant monetary stimulus from the Federal Reserve. The Fed is set to cut interest rates on Wednesday – for the first time since the crisis – but this move will probably be a one-off and not the beginning of an easing cycle. Markets priced in a long cycle of rate reductions and are now paring these expectations.

The Fed’s moderate easing contrasts rising expectations from the European Central Bank. The ECB refrained from any action on Thursday but laid the ground for announcing a significant “package” in its September meeting. The euro ended Thursday on a higher note but has been retreating since then.

Trade tensions between Europe and the US are mounting after French President Emmanuel Macron signed into law a “digital tax” on technology companies – primarily American ones. President Donald Trump has responded by threatening to slap a tariff on French wines and other European products.

In the meantime, face to face trade talks between the US and China are resuming today in Shanghai – for the first time since May. Both sides have only held phone conversations since Trump, and his Chinese counterpart Xi Jinping agreed on a “trade truce” in late June. Any headlines coming out for the meeting may move markets.

The economic calendar features few events today, leaving traders to follow political developments and speculate on the Fed decision. Other notable events are the US Non-Farm Payrolls, euro-zone inflation, and EZ GDP.

EUR/USD Technical Analysis

EUR USD July 29 2019 technical analysis four hour chart

Momentum on the four-hour chart remains to the downside, and EUR/USD continues trading below the 50, 100, and 200 Simple Moving Averages – all bearish signs. The Relative Strength Index (RSI) is leaning lower and remains outside the oversold territory. As mentioned earlier, the currency pair’s failure to recapture the lowest support line at 1.1195 is also a sign that further falls are on the cards.

Initial support awaits at 1.1111, which was a low point on Friday. Thursday’s fresh two-year low of 1.1101 is next down the line. Even lower, 1.1025 and 1.0900 are support lines dating back to 2017.

Looking up, some resistance awaits at 1.1155, which held EUR/USD down last week. The swing high of 1.1190 is the next line to watch. Far higher, 1.1245 worked as both support and resistance earlier in July.

Equities Contributor: FXStreet

Source: Equities News