- The EUR/USD is trading below 1.1600 once again, unable to stage a meaningful recovery.
- The ECB says downside risks have intensified as markets await the next US and Chinese tariffs.
- The technical charts show that the former uptrend support caps the pair.
The EUR/USD is trading below 1.1600 once again after falling early on Wednesday and then recovering. The movements in the pair are relatively limited especially in comparison to the Pound. Sterling tumbled on Wednesday on the news that the UK government will hold a meeting to prepare for a no-deal Brexit. The euro was slightly dragged down by the Pound.
The primary driver was still the US Dollar, which was driven by the mood around trade relations. There have been no new developments, but markets are looking beyond the duties on $16 billion of goods planned for August 23rd by the US. On September 6th, the world’s largest economy may slap tariffs worth $200 billion of Chinese products. China is set to retaliate on both moves.
The European Central Bank released its monthly bulletin, and the central message is that downside risks to the global economy have increased. They focus on trade, stating that the potential US tariffs may put them at the highest level in 50 years. They also warned of heightened market volatility. On growth, the Frankfurt-based institution sees broad-based expansion, but at a slower pace than that seen in 2017.
The ECB’s report was not very different from Draghi’s dovish words two weeks ago, but do not help the EUR/USD recover.
EUR/USD Technical Picture
The EUR/USD is trading below the uptrend support line that supported since mid-June and until it broke down below the line in early August. The former support line now caps recovery attempts. The line currently coincides with the 50 Simple Moving Average on the four-hour chart.
The Relative Strength Index (RSI) is stable around 50 and Momentum is lacking.
1.1575 was a low on Wednesday and also in mid-July. The next downside support is 1.1508 which is the low point this year. 1.1472 is another noteworthy level from the summer of 2017.
1.1620 capped the pair today and also served as support in late July. 1.1665 separated ranges and also coincides with the 200 SMA which begins leaning lower. 1.1720 and 1.1750 are the next levels to watch on the upside.
More: Dollar Domination: 3 reasons why the Dollar remains King, and why it could fall in mid-fall