The EUR/USD currency pair pulled back on Monday trade at 1.1116 shortly after bouncing off the key Fib level at 61.80%. The latest pullback comes after the currency pair’s massive rally late last week pushed it to set weekly highs at about 1.1162.
This rally came following a period of successive declines dating back to August 12, 2019. The EUR/USD currency pair remains relatively volatile as the US-China trade war continues to escalate after China retaliated to Trump’s tariff announcement with a version of their own on US goods.
EUR/USD Fundamentals Overview
From a fundamental perspective, the EUR/USD currency pair is trading at the back of a calm week, which appeared to get heated right at the end after China’s announcement of trade tariffs on US goods worth up to $75 billion. The Asian economic giant also announced that it will resume tariffs on Automobiles and this irked US President Donald Trump.
Trump responded in a raging tweet-storm, which initiated market sell-off and a major plunge in the greenback against rival currencies. This is exemplified by the sharp spike in the EUR/USD currency pair late on Friday last week.
Today’s pullback may have been triggered by weak German data, which missed expectations on IFO Current Assessment, Business Climate, and Expectations for August with 97.3, 94.3, and 91.3 respectively versus 98.6, 95.1, and 91.5. Traders will be watching closely today’s proceedings in the G7 Meeting.
EUR/USD Technical Analysis (the 60-min Chart)
Technically, the EUR/USD currency pair appears very volatile at the moment amid trade wars escalation and weak german data. The currency pair recently bounced off the overbought levels in the Relative Strength Index Indicator after Friday’s surprise spike following Trump’s tweet-storm. Both the 100-hour and the 200-hour MA lines are slightly below the current level of the pair and this provides short-term support.
Therefore, the bulls will be targeting rebound profits at around the 50% Fib level at 1.1140 while the bears will target short-term profits closer to the pair’s current level at 1.1111 (at 61.80% fib level). More opportunities also exist at 38.30% Fib level (for the bulls) and at 76.40% Fib level (for the bears).
EUR/USD Technical Analysis (the Daily Chart)
In the daily chart, the EUR/USD currency pair still appears to be trading within a descending channel, which indicates a bearish bias in the long-term. The currency pair is trading below the 100-day and the 200-day moving average lines, which again supports the bearish market sentiment.
And since pair is firmly placed centrally in the RSI indicator, the current downward channel movement could continue through this week, which makes it interesting for the bears. They will target profits at around 1.1034 while the bulls will hope for a quick rebound towards 1.1181.
In summary, the EUR/USD currency pair looks very volatile in the short-term, but in the long-term, the bears retain control.