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Thomson Reuters
Aug 08 - 02:36 PM
EUR/USD - COMMENT-EUR/USD Longs Reminded That Downside Risk Remain
First appeared on eFXplus on Aug 08 - 10:15 AM

EUR/USD's corrective bounce seems to have run its course after stalling near the 10-DMA. Several factors have helped stem the rise.
A big downside surprise to Spanish industrial output and slower 2019 growth forecasts from Italy's economy minister nL5N1UZ1HA have reinforced market views of slowing euro zone growth.
DE-U.S. yield spreads are widening, augmenting the dollar's yield advantage over the euro.
This dollar resiliency is a weight on EUR/USD.
The dollar is also gaining broad support as the effects of PBOC actions last week to stabilize the yuan wane.
USD/CNH is holding just below trend highs, reflecting the market's willingness to get long dollars.
That suggests selling EUR/USD rallies is the preferred strategy for now.
Technicals also indicate downside risks remain.
EUR/USD is holding below the daily cloud as well as the 10-, 21- and 55-DMAs.
RSIs are biased down and consolidation of long-term losses persists and should resolve with a break to new trend lows. Support at 1.1500 remains significant.
A break there should restart the broader bear trend, opening the door to 1.0900/1.1000.

chart: Click here

Source:
Thomson Reuters IFR Markets

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