EUR/USD stays unchanged near 1.1170 on German data

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  • EUR/USD struggles for direction near 1.1170.
  • German flash Q2 GDP came in at -0.1% QoQ.
  • EMU advanced Q2 GDP figures next on tap.

The sentiment around the shared currency remains under pressure in the first half of the week, with EUR/USD navigating the 1.1170 region ahead of the opening bell in the Old Continent.

EUR/USD flat ahead of EMU data

The pair is digesting yesterday’s moderate pullback to the current 1.1170 region, where coincide the 10-day and 21-day SMAs, all against the backdrop of a renewed pick up in the mood around the buck.

Spot eroded weekly gains on Tuesday after the White House announced a delay in the implementation of tariffs on Chinese products while removing others from the tariffs-list. The announcement brought in some respite in the risk-appetite trend, favouring a sell off in safe havens and a rebound in yields.

Today, EUR trades directionless for the time being although the mood remains quite fragile amidst the recovery in the Dollar and recently released German data, which showed the economy is seen contracting at a quarterly 0.1% during the April-June period.

Later in the day, flash Q2 GDP figures in Euroland will also grab investors’ attention along with employment releases and Industrial Production results. Across the pond, Import/Export Prices are unlikely to be a market mover later today.

What to look for around EUR

The reluctance of EUR to edge lower in the current risk-off environment could be reflected in ‘repatriation’ forces currently at play as well as the potential funding stance of the currency. Italian politics has resurfaced as a source of uncertainty as of late and is expected to weigh on the sentiment sooner rather than later. Sustained bullish attempts in the pair still look flimsy amidst ECB’s preparations for a fresh wave of monetary stimulus (most likely to be announced in September), including a potential reduction of interest rates, the re-start of the QE programme and a probable tiered deposit rate system. In the meantime, the unremitting deterioration of the economic outlook in the region and the lack of traction in inflation are seen capping extra gains and are also lending extra support to the dovish stance of the ECB.

EUR/USD levels to watch

At the moment, the pair is retreating 0.01% at 1.1169 and faces the next down barrier at 1.1161 (low Aug.12) seconded by 1.1101 (monthly low Jul.25) and finally 1.1026 (2019 low Aug.1). On the flip side, a breakout of 1.1232 (55-day SMA) would target 1.1282 (high Jul.19) en route to 1.1291 (200-day SMA).

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