EURUSD Sees a near-Term Retrace as DXY Approaches Convergence Zone. The DXY may benefit from China’s construction industry worries.
EURUSD Pair Key Points
During the European Open, the EURUSD duo takes an uptick.
DXY Will Struggle to Cross Over Key Equilibrium Band Head of FOMC Findings.
If risk-off momentum prevails, China’s construction market issues could provide DXY strength.
EURUSD Pair under Slight Pressure
The EURUSD remained under stress, falling to 1.0925 in the initial minutes of Monday’s European trade. As a result, despite current upbeat stories from Italy. the Euro duo validates the market’s push towards the US Greenback.
Following slapping a one-time forty percent bonanza tax on banks and accepting full accountability on it. The Italian PM Giorgia Meloni ruled out more suffering for them. The Euro bears are being prodded by the US (DXY) drop from its a month’s top.
The U.S. Dollar Index on the other hand, could restrict any persistent upward movement since risk-off sentiments supports the dollar maintained. According to the Currency Strength Gauge listed below, the US dollar is positioned as the second strongest asset today.
Source: FinancialJuice
China and Russian Moves Weighs on the Pair
Concerns of credit market collapse in China and imminent Eurozone economic troubles. That put a downward squeeze on the EURUSD pricing, particularly as US government bond rates rise.
In addition, the varied findings of the German Wholesale Price Index (WPI) from July benefit short traders of the Euro unit.
Nonetheless, China’s Country Garden’s stoppage of bond trading. Adds the lack of payments by a unit of Chinese giant Zhongzhi Enterprise Group to exacerbate China’s financial troubles. Furthermore, Russia’s willingness to outfit new nuclear-powered subs with hypersonic weapons. Alongside the US-China trade war, add an additional risk-off atmosphere, weighing on the EURUSD duo pricing.
As a result, risk-off mood has dominated early this morning, and the US Dollar’s secure haven allure still present. The US currency has gained 4 straight weeks. And the last time the index gained 5 weeks in succession being in May 2022. The FOMC minutes are coming in the next few days, which will be fascinating to watch whether the DXY falls or continue its five-week winning streak.
In other news, (ECB) executives have hinted towards a policy shift in recent public speeches. Whereas the ECB’s regular economic forecast underscored macroeconomic instability and kept Euro sceptics optimistic.
Among these bets, the S&P 500 Index & Euro Stoxx stay moderately offered, Whereas US a ten- Treasury note rates continue to rise to roughly 4.17 percent.
A relatively light schedule within the bloc combines the wary tone front of the Fed Minutes to drive the euro to the dollar traders. Nevertheless, the risk-off mentality could make shorts hopeful.
EURUSD Technical Perspective
To target the 61.8% retracement of the Fibonacci sequence of the May-July upward, at 1.0880 level. In addition to the prior monthly bottom around 1.0835. The EURUSD must close below its 100-DMA support of 1.0930 on every trading session. Failure in doing so may result in a correcting rebound towards the multi-day-old prior supporting line, which is now currently located at 1.1040 zone.
