EUR/USD consolidates near session lows below 1.18 handle
The EUR/USD pair came under a renewed selling pressure in the early NA session and refreshed its session low at 1.1770. As of writing, the pair is trading at 1.1782, losing 40 pips, or 0.34%, on the day.
After starting the week at 1.1840, the pair struggled to build on last Friday's gains, which was fueled by the softer-than-expected inflation readings from the U.S. However, with a lack of fundamental catalysts on Monday, the greenback took that opportunity to make a technical correction, pushing the US Dollar Index to a session high at 93.40 in the first half of the NA session. At the moment, the index is at 93.30, gaining 0.32% on the day.
On Tuesday, Germany will release its preliminary GDP growth figures for the second quarter of the year. Markets expect the data to come in at 0.7% on a quarterly and 1.9% on a yearly basis. However, earlier in the day, Andreas Dombret, a director at Germany's Bundesbank, said that he wouldn't be surprised if German GDP growth beats current forecasts. Later in the day, retail sales data from the U.S., which is expected to rebound to 0.4% in July after contracting 0.2% in June, will be looked upon for fresh impetus. An upbeat reading could allow the greenback extend its recovery gains. On the other hand, a worse-than-expected data is likely to weigh on the buck as it would be assessed as a factor that would keep the inflation subdued in the short-term.
- Bundesbank's Dombret: Euro area has not yet returned to full strength
Technical outlook
The RSI indicator on the daily graph is moving lower towards the 50 mark, suggesting that the pair's bullish momentum is losing strength. However, unless the pair makes a decisive break below the critical 200-WMA at 1.1765, downward corrections could stay limited. Above that level, 1.1845 (Jul. 31 high) could be seen as the initial resistance ahead of 1.1905 (Aug. 2 high) and 1.2000 (psychological level). On the flip side, supports align at 1.1690/1.1700 (Aug. 9 low/psychological level), 1.1610 (Jul. 26 low) and 1.1500 (psychological level).
- EUR/USD neutral in the next weeks – Scotiabank
- EUR/USD seen rangebound in the short term – Danske Bank