Piece written by Alexa Smith, Trive Financial Market Analyst 

After a quiet week in Europe, the EURUSD currency pair tumbled due to stronger-than-expected US PPI growth which boosted the prospect of interest rates remaining higher for longer. The US PPI MoM grew by 0.3% in July after remaining unchanged in June, while Michigan Consumer Sentiment fell less than expected from 71.6 to 71.2, cushioning ahead of the forecasted figure of 71. 

However, a burst of macroeconomic data in Europe is expected this week which could lay out a different path for the currency pair. ZEW Economic Sentiment is expected tomorrow, while GDP growth and Industrial Production data are scheduled for Wednesday. With a decline in both year-on-year GDP growth and Industrial Production expected, a boost in quarter-on-quarter GDP growth may not be enough to bolster the Euro against a robust US Dollar. Meanwhile, year-on-year inflation in Germany cooled last week from 6.4% to 6.2%, falling in line with expectations, which could pave the way for a drop in Euro Area inflation at the end of this week.  

Technical 

A downward trend continues to threaten the EURUSD currency pair after another failed breakout attempt at the 1.10423 resistance level encouraged a leg down towards the 1.09129 support. Since the currency pair edged below the 50-day moving average, downside pressure may push the price action towards the 1.09129 support, where a breakout towards the 1.08383 major support may occur.  

However, a green candlestick may be a martyr for an upward trend if a leg up towards the 1.09928 resistance at the 23.60% Fibonacci level is sustained. If the price action is encouraged to break through this resistance level, a breakout from the 1.10423 resistance may mark a pivot point for a reversal.  

Summary 

The EURUSD currency pair is still being threatened by a strong Greenback on the backdrop of rising PPI data. If macroeconomic data in Europe fails to soften, the currency pair may be encouraged to retest the 1.08383 major support. However, a green candlestick may encourage the curve to flatten and edge up towards the 1.10423 resistance. 

Sources: TradingView, Reuters 

This material is provided for informational purposes only and does not constitute financial, investment or other advice. No opinion contained in this material constitutes a recommendation by Trive Financial Services Malta Limited or its author as to any particular investment, transaction or investment strategy and should not be relied upon in making any investment decision. In particular, the information does not take into account the individual investment objectives or financial circumstances of the individual investor. Trive Financial Services Malta Limited shall not be liable for any loss, damage or injury arising from the use of this information.