EUR/USD drops below 1.17 ahead of Trump-Juncker summit

• Private loans grew by 2.9% in the euro area in June to match May’s reading.
• New home sales in June fell 5.3% in the U.S.
• US Pres Trump and the EC Pres Juncker are scheduled to meet later today.

The EUR/USD struggles to set its next short-term direction as it fluctuates in a very narrow 35-pip on Wednesday. After advancing above the 1.17 mark in the early NA session, the pair came under a modest pressure and turned flat on the day near 1.1690.

Earlier today, the data released by the European Central Bank showed that  new loans issued to consumers and businesses in the private sector rose by 2.9% on a yearly basis in June to come in slightly below the market expectation of 3% but failed to receive a  notable reaction from the markets.  

According to the monthly report released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development, new home sales decreased from 666K in May to 631K in June to miss the experts’ estimate of 670K. This number represented a 5.3% fall from May to June. Despite the disappointing data, the US Dollar Index started to pull away from the session low it set at 94.35 and was last seen down 0.15% on the day at 94.50.

Later in the session, US President Trump will be  meeting with the European Commission President Juncker  and the EU Trade Commissioner Malmstrom in Washington. Ahead of that summit, Trump tweeted out that he would offer that both sides drop all the tariffs, barriers, and subsidies to finally have a fair trade agreement.

However, Deutsche Bank analysts argue that it would be unlikely to reach a deal like that: “Juncker goes to the meeting aiming to compromise on Trump’s auto tariff threat, although the FT pointed out that it may not be that easy to achieve tangible progress. For example a plurilateral tariff cutting deal involving the world’s biggest vehicle producers may also require approval from China as it’s a big manufacturer of car parts or concessions from the US on its the existing 25% duty on light trucks.”

Technical levels to consider

With a daily close above 1.1700 (psychological level/20-DMA), the pair could extend higher and target 1.1790 (Jul. 9 high) and 1.1850 (Jun. 14 high). On the downside, supports could be seen at 1.1655 (Jul. 24 low), 1.1575 (Jul. 19 low) and 1.1500 (psychological level).