Weakness of the ZEW Economic Sentiment Index for Germany and the EuroZone Contrary to expectations of improvement, increased the pressure on the Euro, which has suffered a crisis of confidence since the start of the German-led Eurozone slowdown in response to global trade wars, which has pushed the EUR / USD to move towards the level of psychological support at 1.1200 at the time of writing the analysis, this performance supports the strength of the bearish trend that controls this pair.
The US dollar gained more as investors moved towards it as a safe haven after Trump's latest threat to impose more tariffs on Chinese products worth 200 billion. China has responded by imposing tariffs on $ 60 billion of US imports. The stability of the pair around and below the support level 1.1200 supports the continuation of the bearish trend for the pair. The Euro did not benefit from the high inflation in the Eurozone, as the factors for this rise are still temporary. The dollar gained stronger momentum with positive US job numbers, adding jobs more than expectations and a drop in unemployment to a 49-year low.
The Federal Reserve Board kept the interest rate unchanged as expected, pointing out that it is unlikely to raise or lower interest rates in the coming months amid signs of renewed economic health while at the same time inflation is still unusually low. The Bank's policy statement highlighted its continued failure to raise the annual inflation rate to at least 2%. The Fed's preferred inflation index is about 1.5 percent on a year-on-year basis. Referring to a drop in inflation, the statement may have raised expectations that a change in the next federal interest rate is a rate cut to stimulate inflation or growth.
As we mentioned earlier, we now emphasize that the divergence of the economic situation and the monetary policy between the US and the Eurozone will remain a strong influence on any chances for the pair’s bullish correction.
Technically: We had expected and recommended in the previous analysis for a long time to sell the pair from every ascending level. The EUR / USD is now bearish, and currently the nearest support levels for the pair are 1.1165, 1.1050 and 1.0975, respectively. On the upside side, the German-led Eurozone's negative economy weakened the correction opportunity further. The nearest resistance levels are 1.127, 1.1340 and 1.1420 respectively.
On the economic data front, the economic calendar today will focus on the German and Eurozone GDP. From the U.S there will be an announcement of retail sales, industrial production and oil stock data.
