The EUR/USD currency pair failed to stop its previous day sharp losses and sideways action below 1.1750 level, after hitting the low of 1.1723 level. That happened mainly due to the broad-based U.S. dollar latest recovery moves, supported by the expectations that U.S. Congress got closer to an agreement over the latest COVID-19 stimulus measures.
The U.S. bond yields recovery also gave support to the U.S. dollar. However, the gains in the U.S. dollar could be limited or short-lived as uncertainty about the U.S. economic recovery persists. At the moment, the EUR/USD currency pair is currently trading at 1.1742 and consolidating in the range between 1.1723 - 1.1757. Moving on, the currency pair traders are seemed cautious to place any strong bids ahead of the ZEW Economic Sentiment figures for Germany and the Eurozone, which are scheduled for release at 09:00 GMT.
The German ZEW Economic Sentiment is forecasted to have declined to 57.00 in August from July's 59.3. A below-forecast print would weigh on Euro currency, and above-forecast print would support the Euro currency.
The upbeat market sentiment got any additional boost after U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin showed a willingness to resume stimulus negotiations on COVID-19 related economic relief. However, the gains in the equity market were supported by the positive outcome from the U.S. nonfarm payrolls released on Friday and China inflation data.
At the USD front, the broad-based U.S. dollar succeeded in gaining some positive traction on the day amid the hopes for U.S. stimulus. Still, the bullish bias in the U.S. dollar is expected to be short-lived as doubts remain about the U.S. economic recovery amid on-going coronavirus cases. However, the gains in the U.S. dollar became the key factor that kept the currency pair lower. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped 0.06% to 93.537 by 10:01 PM ET (3:01 AM GMT).
Across the pond, the on-going tension between US-China may help the U.S. dollar put the safe-haven bids. U.S. President Donald Trump banned American firms from dealing with Chinese apps such as TikTok and WeChat. The U.S. sanctioned 11 Chinese officials and their allies in Hong Kong, including Hong Kong's Chief Executive Carrie Lam. As in result, the Dragon Nation also retaliated by imposing fresh sanctions on 11 Americans yesterday. This move challenged the risk-on market sentiment and supported the U.S. dollar further.
The market players are keenly awaiting the ZEW Economic Sentiment figures for Germany and the Eurozone, which are scheduled for release at 09:00 GMT. The focus of traders will also shift towards the US NFIB Business Optimism Index (Jul) and Producer Price Index (July).
Daily Support and Resistance
S1 1.1629
S2 1.1694
S3 1.1717
Pivot Point 1.1759
R1 1.1783
R2 1.1824
R3 1.1889
The EUR/USD pair took a slight upward movement amid profit-taking in the U.S. dollar. The EUR/USD pair is likely to find resistance at 1.1806 level, and closing of candles below this level can drive selling bias in the pair. On the lower side, the pair can still find support at 1.1725. The 4-hour chart shows that the EUR/USD pair has formed a downward channel, which is extending resistance at the 1.1806 level. The RSI is also staying below 50, which is still suggesting selling bias. Let's keep an eye on 1.1806 level to stay bearish or bullish above the same. Good luck!