The common currency ended lower for the fourth straight session on August 30. The short term trend of EURUSD continues to be negative. Immediate supports to be watched at 1.1020 and 1.1000 below here focus shifts to its C point on the weekly and daily chart. 

 Comments from the Dutch central bank governor Klaas Knot put pressure on the EUR. 

 “Dutch central bank governor Klaas Knot, who in an interview in Amsterdam said the economy does not yet warrant a resumption of the QE programme which, he says, would have no value added. He said if further stimulus is warranted then conventional policy would be the appropriate instrument to contemplate (funny how taking interest rates into deeper negative territory is now described as ‘conventional’).” NAB reported this morning. 

 Data review: Data prints so for in this week paints a is a mixed picture with German Ifo index down further whereas German Gfk consumer index was surprisingly up. 

“The global economic downturn, trade wars, and the ongoing discussions surrounding Brexit are all putting increasing pressure on the economic outlook of consumers. This has resulted in the economic indicator for August dropping to its lowest level in more than six and a half years” according to Gfk.

  • The ifo Business Climate Index fell in August from 95.8 to 94.3 points, according to the official release. Ifo also reported that “There are ever more indications of a recession in Germany.”.
  • GfK forecasts that the consumer climate in September will remain unchanged from the previous month at 9.7 points.

 Looking ahead, eurozone CPI due today. 

 The recent volatility indicates excessive pessimism among the traders, and we do not see this fading away anytime soon. 

The downside breakout of immediate support levels could mean renewed selling pressure after a range move.

As we suggested in Tuesday’s article, the price favors selling on every rise. 

Since early August the price bound to consolidate in a narrow range between 1.1250-1.1020 levels. The bearish turnaround of the daily oscillator should cap the rallied in the coming days. Against this backdrop, a lasting break of the 1.1020-1.1000 sounds tricky, and we rather fear a decline to 1.0960 (C point on the weekly chart). Note that a break below this level would underpin bearish momentum, paving the way for a decline to 1.0860 (point C on the daily chart).

If the price is moving higher, the key resistances stand at 1.1170 and 1.1250. In the present context, any upside bounce to 1.1250-its 200MAs could be an opportunity to sell on a rise. A sustained above 1.1250 will be the first sign of short-trend reversal.

 

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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