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EUR/USD analysis: dollar bends but doesn't break

Written By LMAX Exchange Research Desk | 2018-08-07 12:26:00 GMT

The EUR/USD pair recovered some ground on broad dollar's weakness, which anyway receded during US trading hours. Stocks soared on the back of solid earnings reports that overshadow concerns related to the trade war between the US and China. Adding to dollar's woes, the Chinese Yuan appreciated on the back of the measures taken by the PBoC last week, although the currency continues to fluctuate wildly amid uncertainty surrounding trade tensions. The EUR/USD pair peaked at 1.1607, spending most of the US afternoon consolidating around the 1.1600 figure.

The macroeconomic calendar offered little of relevance, but news were EU-negative, given that German figures disappointed. June's trade balance posted a surplus of €19.3B, missing market's expectations with Industrial Production in the same month decreased by more-than-expected, down by 0.9% from a month ago. In the US, the number of job openings in the was little changed at 6.7 million on the last business day of June, according to the official report, while the latest IBD/TIPP Economic Optimism survey showed that consumer confidence jumped to 58.0 in August from 56.4 in the previous month, its highest in almost two years. None of both economies will offer relevant figures this Wednesday.

Dollar's decline seems corrective, as the American currency appreciated all through last week, approaching the yearly high against the common currency. The EUR/USD pair settled around the 1.1600 level after peaking at 1.1607, below the daily ascendant trend line broke last week, and currently acting as an immediate resistance in the 1.1620/30 region. In the 4 hours chart, the pair managed to advance above its 20 SMA, but remains well below the larger ones, while technical indicators lost upward strength after entering bullish territory, limiting the upward scope. An acceleration through the mentioned 1.1625 region could lead to further gains, but bears will be less interested only with an advance beyond 1.1660, unlikely at this point.

Support levels: 1.1550 1.1510 1.1490  

Resistance levels: 1.1625 1.1660 1.1700   

View Live Chart for the EUR/USD

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By LMAX Exchange Research Desk
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