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EUR/USD analysis: dollar the strongest consolidates in quiet Monday

Written By LMAX Exchange Research Desk | 2018-08-06 11:59:00 GMT

The EUR/USD pair traded as low as 1.1529, as the dollar remained strong, particularly at the beginning of the day, as trade war fears remained unabated, leading to European indexes closing the day marginally lower.  An empty macroeconomic calendar and a bank holiday in Canada helped the pair bounce in US trading hours, although the EUR/USD pair remained well below the 1.1600 level. The EU released the Sentix Investor Confidence Index, which resulted up in August at 14.7 from July's 12.1, but the positive headline was offset by German Factory Orders, which plunged 4.0% MoM in June. A surprising comment from Fed's Bullard, one of the most dovish members of the US Central Bank, added to the greenback's positive tone as he said that the US economy expansionary rate is not a sign of an upcoming "inevitable recession," as the growth rate has picked up recently, but "it’s, generally speaking, been very slow.”

There are some macroeconomic news scheduled for Tuesday, including Germany trade balance and Industrial Production for  June, and some minor figures from the US, but things will become more interesting in the data front by the end of the week, with US inflation and UK GDP among other figures.

Technically, the latest recovery has been barely enough for the pair to correct extreme oversold conditions, but the risk of another leg lower toward the yearly low of 1.1507 remains high, as in the 4 hours chart, the price continues developing far below an almost vertical bearish 20 SMA, while technical indicators remain well into negative territory after correcting extreme conditions. The current negative stance could ease only on a recovery above the 1.1620 price zone, while below 1.1510, the pair has room to extend its decline toward the 1.1440/60 region.

Support levels: 1.1510 1.1490 1.1460

Resistance levels: 1.1590 1.1620 1.1660       

View Live Chart for the EUR/USD

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By LMAX Exchange Research Desk
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