Since the beginning of November, the euro has only had two winning days against the dollar. Yesterday, the shared currency incurred more losses despite better-than-expected data from Europe. Will it find any support from today’s reports?
ZEW Economic Sentiment reports for Germany and the euro zone bloc were released yesterday. The reading for Germany printed at -2.1 which beat expectations for a -13.2 reading. Meanwhile, that for the euro zone came in at -1.0 which was also better than the -11.5 forecast. The report reveals that investors and businesses are less pessimistic about their economic outlook and are hopeful for trade developments.
Across the Atlantic, US President Donald Trump seemed to support this sentiment. He mentioned that a trade deal with China was “close” but did not talk about details of their negotiations. In fact, he even went as far as to say that the US could impose more tariffs if they did not come into agreement with each other.
Today, only an inflation report from Germany and euro zone industrial production reports are due. At 7:00 am GMT, the final reading of Germany’s CPI for October is not expected to show any changes from its preliminary reading of 0.1%. Then at 10:00 am GMT, industrial production in the euro zone is eyed to show a contraction of 0.2% for September.
EURUSD is currently hovering around the 1.1000 psychological handle early into the Asian session. The currency pair’s gains today could be limited by resistance at the falling trend line connecting the highs of November 7 and November 12 around 1.1020. This price also coincides with EURUSD’s previous low and the 50% Fib level. If the dollar continues to dominate today’s trading, the next support level for the currency pair is around 1.0950 where it found support in October 9.
If EURUSD were to rally and break resistance that the trend line and Fib levels, the next resistance would be at 1.1072 where it found support in October 25. This is also the neckline of the double top chart pattern on the daily time frame.Download our latest quarterly market outlook for our longer-term trade ideas.