EUR/USD touched a low of 1.1195 before bouncing back up again
While the data isn’t really spurring real money flows just yet, it is but a reminder of the fragility of the euro and that dark clouds continue to reside over the German/Eurozone economy at this current point in time. The euro fell slightly from 1.1210 to 1.1195 but has bounced back to just above 1.1215 now against the dollar.
If anything, this feels more like a warning shot by sellers as they look to push the issue for a downside extension in EUR/USD. For now, the 1.1200 handle is holding up but the key for me is support at 1.1187 on the daily chart:
If sellers are able to firmly close below that, it will open up the floodgates for a further move lower in EUR/USD.
In the near-term, technical players may capitalise slightly on the double bottom around 1.1200 but sellers are still well in control of the pair as price holds below both key hourly moving averages. The 100-hour MA is seen at 1.1240 so that is likely to cap upside moves on a short-term correction.
In the bigger picture, as long as economic data continues to suggest weakening conditions – like the Ifo data earlier – then it is hard to really bet on any hopes of a quick economic recovery as what European policymakers and lawmakers are hoping for in 2H 2019.
In that lieu, it will also limit any upside potential for the euro until we start to see economic data pull off a sustained run by surprising to the upside.