I want to get short at 1.1600 with a stop loss at 1.1750 and a profit target of 1.1400.
EUR/USD 240 min Chart - EUR/USD is Weak
Greenback Leading the Charge
The story in world markets at the moment appears to mainly be focused on the steep decline in stock markets. Wall Street had a rough time of things in the last seven days and we saw all the major indices decline.
Fears around the prospect of future growth are the main driver. As we have seen interest rates rising, both with the 10-year note and also via the FOMC last month.
At the same time, it now looks like US President Donald Trump’s Chinese tariffs are here to stay, which is going to be another drag on the economy.
For the most part, the negative sentiment on US equity markets hasn’t dragged the USD down all that much. The rising yields have helped add some demand and that is what will ultimately weigh on the EUR/USD going forward.
Key Economic Data
This week we have Eurozone CPI, however, we haven’t seen much happening on this front recently. The target band for the ECB is 2-3% and we are predicting 2.1%, so we are right at the low end of the inflation target. There is not likely to be a rate hike coming anytime soon, even if we do get an uptick in CPI.
On Monday, the US will release retail sales data. The US economy is really starting to look strong so I would think there is a good chance of a strong number here which might very well lift the EUR/USD.
The EUR/USD has found resistance at 1.1600 in the last week and that is a good level to key off for a short position. Above that point, resistance is very strong near 1.1750.
The swing low at 1.1300 remains the big level below, however, I think we should see strong buying in the 1.1400-1.1450 range.
EUR/USD - Key Levels
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