Bears to send euro sub $1.12?
Fiona Cincotta July 8, 2019 10:03 AM
Whilst the eurozone consumer had been underpinning the bloc’s economy, for how much longer this will continue is dubious. Last week eurozone retail sales were short of expectations raising questions as to whether the weakness in the manufacturing sector is now seeping deeper into the economy. Investor confidence dropped to -5.8 in July, well short of 0.2 increase forecast. Fears are growing that a German recession is looming.
ECB member Benoit Couere added to the negative sentiment towards the euro, saying that accommodative monetary policy is needed more than ever.
As more dovish sounds come from the ECB the euro could struggle to gain ground, particularly versus the dollar, as rate cut expectations ease stateside.
Dollar holds onto NFP gains
The dollar has held onto gains from the end of last week following the much better than forecast headline non-farm payroll figure. With 224k jobs created in June, well ahead of 164k expected. The strong number has made investors question the likelihood of a deep rate cut by the Fed in July. As investors push back on rate cut expectations the dollar has strengthened.
Investors will now look ahead to an appearance by Fed Chair Jerome Powell in front of the House Financial Services Panel for further clues as to the next steps by the Fed. The Fed will almost certainly want to wait for more data before acting after the NFP surprise, but this could be the week when Fed Chair Powell guides the markets ti the direction of their intentions.
EUR/USD Levels to watch:
EUR/USD hit an intraday high of $1.1235. It has since swung lower. Trading below its 50, 100, 200 sma on the 4 hour chart, showing bearish momentum. Support can be seen at $1.1180, prior to $1.1140 and $1.1105. On the upside, resistance is seen at $1.1270, $1.1320 before $1.1350.
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