EURUSD Technical Outlook (Daily)
EURUSD: Risk aversion took over the financial world Thursday, with stocks weakening, treasury yields reaching multi-month lows and Gold rallying to a 3 wk high.
The catalyst beyond this sudden change in market’s sentiment was Chinese inflation data, up by 2.0% yearly basis, missing expectations of a 2.2% gainer and below previous 2.3%.
On a monthly basis, inflation fell by 0.5%.
The Producer Price Index (PPI) showed an improvement, printing a 2.8% decliner Vs previous 3.4%, improving as a result of higher commodity prices.
Contracting inflation, revived fears of a local economic slowdown, and that it could quickly spread to other major economies.
In the West, the economic calendar was light again, with only Germany releasing its April trade balance, which showed a surplus of EUR 25.6-B in April 2016, compared to a year earlier, when the surplus was of EUR 21.8-B, and the US posting its weekly unemployment claims, which came in at 264-K, beating expectations, for the week ending 3 June.
The USD benefited alongside with Gold and JPY in a risk averse environment, leading to a decline in the EURUSD to a weekly low of 1.1305.
Having bounced modestly from this last, the technical outlook for EURUSD is Bearish, although a break below the 1.1280/90 region is needed to confirm further declines.
The technical reads in the 4 hours favor such declines, as the Key indicators have broken below their mid-lines, and stand at 2 week lows, although with limited Southward strength due to the lightened volumes seen during the last hours of US trading.
Support marks:1.1280 1.1250 1.1210
Resistance marks: 1.1355 1.1380 1.1420
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