The selling bias prevails around the European currency on Wednesday and is now motivating EUR/USD to extend the sideline theme in the low-1.1700s. The pair is down for the second day in a row, extending the rejection from Monday’s tops in the boundaries of 1.1800 the figure against the backdrop of increasing concerns over the US-China trade war. In fact, the risk aversion sentiment re-emerged among traders after the US threatened to impose an extra $200 billion tariffs on Chinese products and the subsequent retaliatory answer by China, all rendering in moderate losses in Asian markets earlier today.
EURUSD Consolidates
Looking ahead, ECB’s M.Draghi, Y.Mersch, P.Praet and D.Nouy are due to speak in an ECB event, whereas June’s Producer Prices and the weekly report by the EIA are only due across the pond. Despite falling hard the EURUSD pair has found a bit of support near the 1.17 level. So far the pair hasn’t faced much influence over market’s reaction for US laying tariff worth $200 billion on Chinese goods. On the economic calendar this week, the most likely event to trigger volatility is the U.S. consumer price index (CPI) figures, scheduled for release on Thursday. Analysts are expecting CPI and core CPI to remain unchanged at 0.2% in June.
An upside surprise could provide the catalyst dollar bulls are looking for, especially after the softer-than-expected average hourly earnings and unemployment rate from last week’s NFP reading. At the moment, the pair is losing 0.09% at 1.1733. The Technical Confluences Indicator shows that the pair is battling the 1.1722 – 1.1734 area where it is hugged by a congestion of many levels. These include the Simple Moving Average 5-one-day, the Fibonacci 38.2% one-day, the Fibonacci 61.8%, the Bollinger Band 15m-Lower, the Fibonacci 23.6% one-week, the SMA 515m, and the SMA 5-4h. Should the pair give in to pressure and fall, the next substantial confluence of support is at 1.1704 which is the confluence of the Fibonacci 38.2% one-week, the Pivot Point one-day Support 1, and the Bollinger Band 1h-Lower.