EUR/USD finds support above 1.1160 and rebounds back to the 1.1200 zone
- Euro trims losses during the US session as equity prices move off highs.
- EUR/USD flat for the day, 200 pips above last week lows.
The EUR/USD pair bottomed at 1.1166 after the beginning of the American session and the rebounded toward the 1.1200 area. As of writing, trades at 1.1195, slightly below the 20-hour moving average.
Negative correlation with Wall Street remains elevated
The EUR/USD pair continues to move in synchronization with the DOW JONES index, in the opposite direction. Equity prices in Wall Street are higher today, while the euro is down versus the dollar. At the same time, Eurozone bond yields remain near record lows while in the US, yields moved modestly off yesterday’s multi-year lows.
The critical driver continues to the US-China trade tensions. After yesterday designation of “currency manipulator” from the US, came the recovery of the yuan, helping offset some of the concerns. The latest today were comments from US officials showing expectations that negotiations could resume, including the possibility to avoid recent tariffs.
Short-term outlook
The euro currently is testing the 1.1200 area (also the 20-day moving average). A break above would strengthen the case for more gains. The next resistance is seen at 1.1225, followed by 1.1245/50 (Aug 6 high). If the pair fails to regain levels on top of 1.1205 and drops back under 1.1190, the US dollar could test the daily low and below the next support is 1.1160. AS long as the Euro holds on top of 1.1130, the short term bias will favor the upside.