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Colin First

EURUSD pair continues to suffer from the impact of geopolitical and economic woes resulting in relatively subdued price action. The pair breached critical support level at 1.1364 last Friday and declines as low as 1.1353 as dovish pressure from European markets pressured Euro across the week. Despite a relatively steady risk appetite across the week, Euro continued to suffer bearish pressure owing to multiple political issues in European markets and some of the events from last week have carried forward their bearish influence into Monday’s trading session which is expected to greatly limit the upside potential of the pair. Key European events/issues that are in investors focus include – Brexit, Italy’s “Anti-EU Axis” and French Yellow Vest protest which continues to hurt economic activity. While the slowdown in Euro-area economic growth owing to political issues continue to hurt investors risk appetite, escalating Sino-U.S. trade war tensions also limit the bullish potential of the pair.

European Political Issues Continue To Pressure EURO In Immediate Future

Sino-U.S. trade war-related headlines continues to remain as a major factor affecting long term run of high-risk assets in the global market and mixed headlines which point to the possibility of continued escalation in trade wars as key issues such as Intellectual Property Infringement remain untouched affects the long term outlook of the pair all of which point to high probability of further downtrend action in immediate and near future trading sessions. Following Chinese GDP data which shows some level of growth despite trade war slowing down Chinese GDP growth pace to lowest in nearly three decades, risk appetite remains steady in Asian markets. This has helped the pair rebound from last week’s decline post slight consolidative action in early Asian market hours. However, a clear lack of fundamental support for bulls has resulted in upside remaining capped at 1.137 handle ahead of European market hours.

As of writing this article, the EURUSD pair is trading at 1.1378 up by 0.14% on the day. On release front today, economic calendar schedule is silent in both sides of pair aside from German PPI data which is forecast to see a decline compared to previous readings which could further hurt Euro’s demand in the broad market. The main focus is on German ZEW economic data which is usually viewed as a proxy update that reflects the European economic climate and is expected to have a great impact on the immediate future of common currency. Given cautious nature of the global market at the start of the week despite prevalent risk appetite and lack of fundamental support for EURO, the pair is likely to resume bearish price action in near future. If the pair breaches critical support at 1.1364 & 1.1310 handles, it is likely to see a sharp decline towards 3-month lows at 1.1212. On the flip side, a breach about critical resistance at 1.1425 is to be met with a psychological resistance level of 1.1495/1.1500 which needs to be breached for sustained bullish price action.

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