12 Aug 2015
EUR/USD ends the day with strong gains
FXStreet (Buenos Aires) - The American dollar was in sell-off mode this Wednesday, closing the day down against all of its rivals, amid another devaluation of the Yuan.
The PBoC devalued its currency by 1.6% on Wednesday, following a similar move on Tuesday, when the Central Bank lowered the daily fixing price by 1.9%, aiming to control an "excessively strong" currency. The movement resulted in a sell-off of the American dollar, as investors are now reconsidering the possibility of a FED rate hike in September.
The common currency rallied up to 1.1213, a fresh 5-week high, despite tepid macroeconomic data as the EU Industrial Production in June, resulted in a 0.4% drop monthly basis, whilst the year-on-year reading gained 1.2% against expectations of a 1.5% advance. In the US, the number of job openings reached 5.2 million in June, according to the US Bureau of Labor Statistics, slightly below market's expectations, whilst FED's Dudley said that the hopes they can lift rates soon, but avoid to comment on a certain time.
EUR/USD technical perspective
“The EUR/USD pair retreated some from the mentioned daily high, but ends the day with strong gains, and despite extremely overbought in the short term, the 1 hour chart is far from suggesting a reversal, as the price remains well above a bullish 20 SMA, whilst the technical indicators have barely corrected extreme readings and the RSI indicator is now turning flat around 69”, said Valeria Bednarik, chief analyst at FXStreet. “In the 4 hours chart the technical indicators are also showing signs of upward exhaustion in extreme overbought territory, not yet suggesting a downward correction move. As long as the price holds above 1.1120, the risk will remain towards the upside, with scope to extend its gains on a break above 1.1240, a strong static resistance level”.
Support levels: 1.1160 1.1120 1.1050.Resistance levels: 1.1190 1.1240 1.1280.
The PBoC devalued its currency by 1.6% on Wednesday, following a similar move on Tuesday, when the Central Bank lowered the daily fixing price by 1.9%, aiming to control an "excessively strong" currency. The movement resulted in a sell-off of the American dollar, as investors are now reconsidering the possibility of a FED rate hike in September.
The common currency rallied up to 1.1213, a fresh 5-week high, despite tepid macroeconomic data as the EU Industrial Production in June, resulted in a 0.4% drop monthly basis, whilst the year-on-year reading gained 1.2% against expectations of a 1.5% advance. In the US, the number of job openings reached 5.2 million in June, according to the US Bureau of Labor Statistics, slightly below market's expectations, whilst FED's Dudley said that the hopes they can lift rates soon, but avoid to comment on a certain time.
EUR/USD technical perspective
“The EUR/USD pair retreated some from the mentioned daily high, but ends the day with strong gains, and despite extremely overbought in the short term, the 1 hour chart is far from suggesting a reversal, as the price remains well above a bullish 20 SMA, whilst the technical indicators have barely corrected extreme readings and the RSI indicator is now turning flat around 69”, said Valeria Bednarik, chief analyst at FXStreet. “In the 4 hours chart the technical indicators are also showing signs of upward exhaustion in extreme overbought territory, not yet suggesting a downward correction move. As long as the price holds above 1.1120, the risk will remain towards the upside, with scope to extend its gains on a break above 1.1240, a strong static resistance level”.
Support levels: 1.1160 1.1120 1.1050.Resistance levels: 1.1190 1.1240 1.1280.