The EUR/USD fell back below the 20-day SMA on Monday as the markets started the week in risk-off mode triggered by weak Chinese data that exacerbated global recession fears.
The EUR/USD pair slid below the 1.0200 level and hit a low of 1.0154 during the New York session. It last traded at the 1.0160 zone, recording a 1% loss on the day.
During the Asian session, China published disappointing data that signaled slowing economic activity. Although Chinese retail sales were up 2.7% YoY in July and the Industrial production rose 3.8% in the same period, both readings missed by far the market’s expectations of 5% and 4.6%, respectively. Also, the PBOC (People’s Bank of China) unexpectedly cut a key medium-term policy interest rate, suggesting policymakers are worried about weaker growth.
Against this backdrop, the US dollar, measured by the DXY, rose for a second straight day, posting a 0.8% gain at the 106.50 zone. The yield on the US 10-year note was down 2.19% around 2.77%, suggesting a higher demand for American bonds as the global economic outlook worsens.
From a technical view, the short-term outlook for the EUR/USD has turned neutral, according to indicators on the daily chart. The RSI gained a negative slope and fell below its midline, while the MACD printed lower green bars, indicating dwindling buying interest.
On the downside, support levels are seen at the 1.0150 area, followed by the 1.0100 psychological zone. A break below the latter would expose a retest of the parity level and potentially fresh cycle lows.
On the other hand, the 20-day SMA at around 1.0213 is now the immediate resistance level to regain for the bulls. A recovery of this level could pave the way towards the 1.0250 zone en route to the 1.0300 area.
The EUR/USD pair slid below the 1.0200 level and hit a low of 1.0154 during the New York session. It last traded at the 1.0160 zone, recording a 1% loss on the day.
During the Asian session, China published disappointing data that signaled slowing economic activity. Although Chinese retail sales were up 2.7% YoY in July and the Industrial production rose 3.8% in the same period, both readings missed by far the market’s expectations of 5% and 4.6%, respectively. Also, the PBOC (People’s Bank of China) unexpectedly cut a key medium-term policy interest rate, suggesting policymakers are worried about weaker growth.
Against this backdrop, the US dollar, measured by the DXY, rose for a second straight day, posting a 0.8% gain at the 106.50 zone. The yield on the US 10-year note was down 2.19% around 2.77%, suggesting a higher demand for American bonds as the global economic outlook worsens.
From a technical view, the short-term outlook for the EUR/USD has turned neutral, according to indicators on the daily chart. The RSI gained a negative slope and fell below its midline, while the MACD printed lower green bars, indicating dwindling buying interest.
On the downside, support levels are seen at the 1.0150 area, followed by the 1.0100 psychological zone. A break below the latter would expose a retest of the parity level and potentially fresh cycle lows.
On the other hand, the 20-day SMA at around 1.0213 is now the immediate resistance level to regain for the bulls. A recovery of this level could pave the way towards the 1.0250 zone en route to the 1.0300 area.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.