The EUR/USD pair failed to continue its early-day strong bids and dropped to 1.1711 level even after the upbeat German data, which showed that the export expectations for Europe's economic powerhouse improved sharply in July, after re-open the coronavirus pandemic-imposed borders closure.
However, the reason for the losses in currency pair could also be attributed to the broad-based U.S. dollar strength, triggered by geopolitical tensions and hopes that policymakers be closer to a result over the next U.S. fiscal stimulus package, which contributed to the currency pair gains.
At the moment, the EUR/USD currency pair is currently trading at 1.1710 and consolidating in the range between 1.1708 - 1.1774. However, the currency pair buyers seemed cautious to place any strong position ahead of the C.B. Consumer Confidence, which is due to release.
At the US-China front, the tussle between the US-China got an additional burden after China ordered the closure of the U.S. office in Chengdu, a tit-for-tat reply for the United States' previous move over the Chinese office closure in Houston. The U.S. is increasing aerial surveillance over the South China Sea to a record level to keep watch on China. As per the keyword, "Spy planes from the U.S. navy, air force and army are involved in an apparent three-pronged drive to track Chinese submarines and monitor activity by the People's Liberation Army (PLA), which has redoubled training for operations aimed at Taiwan." Further added, "In Beijing, procurement documents from the China State Shipbuilding Corporation have revealed plans to build an amphibious assault ship ideal for island invasion." However, these statements instantly escalated tensions between both countries.
As in result, the broad-based U.S. dollar erased its early-day deeper losses and edged higher, at least for now. However, the U.S. dollar gains could be short-lived or temporary due to the worries that the economic recovery in the U.S. could be stopped in the wake of the resurgence in coronavirus cases. However, the gains in the U.S. dollar kept the EUR/USD currency pair under pressure. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies recovered 0.04% to 93.773.
In the absence of the major data/events on the day, the market traders will keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum. As well as, the traders will keep their eyes on the news concerning U.S./China.
Daily Support and Resistance
Pivot Point 1.1738
The EUR/USD is consolidating at 1.1728 level, lingering above a support level, which worked as resistance in the past, of 1.1715. As you can see on the hourly chart, the EUR/USD traded in an overbought zone and has now started dropping towards a 50% Fibonacci retracement level of 1.1680 while it has already completed 38.2% Fibo retracement at 1.1705 level. Below 1.1705, we may see EUR/USD prices dropping towards 1.1705 and 1.1680 level. In contrast, the resistance stays at 1.1735 and 1.1780 level. Let's consider selling below 1.1735 level today. Good luck