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EUR/USD Examins Upward Trendline Support - Checkout Quick Trade Idea! 

The EUR/USD is trading with a slight bearish bias at 1.1820 level, mainly due to the risk-off market sentiment, which underpinned the broad-based U.S. dollar and contributed to the currency pair losses. On the other hand, the China-US intensifying tensions overshadowed the recently released upbeat German Industrial Production data. Whereas, the rise in Chinese exports also failed to exert any positive impact on market trading sentiment. The EUR/USD is trading at 1.18431.1843 and consolidating in the range between 1.1820 - 1.1884.

The Industrial Production in Germany climbed more-than-expected in June, as per the official data report, suggesting that the manufacturing sector's recovery slowly picking up speed.            

At the data front, the industrial output arrived in at +8.9% MoM, the federal statistics authority Destatis stated in numbers adjusted for seasonal and calendar effects, against an 8.1% increase expected and +7.4% last. Annually, the German industrial production came in at -11.7% in June against -19.5% booked in May. This above forecasts German industrial figures slightly helped the EUR/USD currency pair to limit its earlier-day losses by underpinning the shared currency.

Despite the upbeat China data released during the Asian trading hours, the market trading sentiment still flashing red as futures tied to the S&P 500 is currently down 0.5%, and the U.S. dollar is obtaining ground versus majors. This reason could be associated with an intensifying struggle between the US-China. The tension took further pace after the U.S. President Trump signed an executive plan to ban any transactions with ByteDance, the Chinese company with the video-sharing app TikTok. As per the Trumps keywords "We must take aggressive action against the owners of TikTok to protect our national security," In the light of national security right, the then Secretary of State Michael Pompeo also warned China the U.S. would take action on Chinese software companies that are rendering data straight to the Chinese government.

At the China data front, China's dollar-denominated exports increased 7.2% in July, while imports slightly declined by 1.4% from a year ago, as per the country's General Administration of Customs data. However, the rise in export suggests an improvement in global demand conditions. 

Apart from this, the Trump administration has decided to impose tariffs on Canada's aluminum to renew the global majors' trade war. However, the trader now awaits the answer from Canada in return for U.S. action. These gloomy updates add further burden on the market risk tone.

As a result, the broad-based U.S. dollar succeeded in stopping its early-day losses and took the safe-haven bids on the day amid market risk-off sentiment. However, the U.S. dollar gains could be short-lived or temporary due to the fears that the global economic recovery could be halt because of the second wave of coronavirus cases. However, the gains in the U.S. dollar kept the currency under pressure. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies recovered to 92.972.

The market players will carefully follow the RBA Monetary Policy Statement (MPS) and U.S. July month employment data. As well as, the updates on the virus and Sino-American tension could not lose its importance. In the meantime, the market players will be interested in the report concerning the U.S. fiscal plan.



Daily Support and Resistance

S1 1.1674

S2 1.1772

S3 1.1825

Pivot Point 1.1871

R1 1.1923

R2 1.1969

R3 1.2067

The EUR/USD pair dropped to complete a 38.2% Fibonacci correction at 1.1817 marks. On the upper side, the EUR/USD pair may find resistance at 1.1909 mark, and the formation of candles below this mark can keep bearish influence on EUR/USD. An upward breakout of the 1.1899 level can extend the bullish trend till 1.2050. Now, the EUR/USD is anticipated to find support at the 1.1800 mark. Let's focus on NFP and the unemployment rate from the U.S. as it may drive distinctive price action in the EUR/USD pair.

EagleFX Review

Friday, 07 Aug, 2020 / 10:33

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