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EUR/USD Upward correction loses momentum at 1.0950

Bidding against the EUR/USD remains intact on Friday, but the positive momentum was lost near the 1.0950. After bottoming just above 1.09, an upward correction occurred in the middle of the 1.0900, where momentum eased.

The euro recovered from its low, after which US economic data had declined sharply, depriving the USD of demand. US durable goods orders and core orders for durable goods increased by 0.2% and 0.5% on a monthly basis in August. Other US data showed that private incomes were in line with the forecast at 0.4% (month), while private spending was disappointing at 0.1% (month). Core PCE rose 0.1% on a monthly basis (expected 0.2%) and 1.8% (year).

Also read  EUR/USD: Test of 1.0925 is likely below 1.1053

ECB chief economist P. Lane argued, however, that the ECB’s interest rate cut merely represented a new calibration. This assessment contradicts his comment from Thursday when he said that there is further scope for interest rates down. The current slowdown is in his view, only a temporary weakness (really?).

The euro reached its new 2019 low just over 1.0920 as investor sentiment remains gloomy. The recovery of the German economy is likely to take longer than expected, as the latest Flash PMI results showed. Economic activity in the region is slowing and the ECB’s monetary policy will remain loose for a long time, while the German economy may experience a technical recession in the third quarter.

Also read  EUR/USD: Rallies capped at 1.0950

Technical Levels

S1  1.0928

S2  1.0921

S3  1.0915


R1  1.0941

R2  1.0947

R3  1.0954


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