FUNDAMENTAL NEWS

US inflation and another strong month of non-farm employment growth likely to resist the euro vertical rally further.

Data review:

  • Euro area annual inflation stable at 1.3%
  • Euro Area unemployment rate was 9.1% in June 2017, down from 9.2% in May 2017.
  • GDP up by 0.6% in both the euro area and the EU.
  • Industrial producer prices down by 0.1% in euro area Down by 0.2% in EU.
  • Germany industrial production was down by 1.1% from the previous month.

 Upcoming data:

  • Tue, Aug 08

Germany Trade balance.

Given the lack of macro economic data, it is understandably a quiet week in the markets. Market participants focus on the US data outcome.

 

TECHNICAL VIEW

The euro has retraced 23.6% after last week NFP data but respected the parallel support. Last Friday price action fail to breach the bullish channel, but the daily and weekly RSI remain overbought.

Last week resistance turns to support, i.e 200WMA. The euro has a support finds at 1.1770 its 200WMA below this 1.1720 a parallel support. Some traders used this dip to buy, but we are still on the side lines. The 38.2% finds at 1.1600 and the 20DMA finds at 1.1660, we are a buyer around 38.2%.

Potential resistance remains at 1.1800, 1.1840 and 1.1900/1.1910.

We continue to believe a near-term retracement in the euro.

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

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