EUR/USD climbs above 1.12, looks to snap three-week losing streak
- Greenback comes under modest selling pressure in last hour.
- US President Trump's comments on US-China trade conflict weigh on T-bond yields.
- EUR/USD remains on track to post weekly gains.
The EUR/USD pair gained traction into London fix and rose to a fresh daily high of 1.1218. As of writing, the pair was trading at 1.1215, adding 0.33% on the day and more than 100 pips since the start of the week.
Dollar looks to end week on a weak note
The uncertainty surrounding the US-China trade conflict seems to have forced investors to reposition themselves ahead of the weekend. While speaking to reporters earlier today at the White House, Trump said that next round of face-to-face talks with China was still scheduled to take place next month in Washington but responded "maybe" when asked if there was a possibility of that event getting cancelled.
The 10-year US Treasury bond yield broke below its tight daily range on these comments and erased more than 1% to weigh on the Greenback. The US Dollar Index, which spent the major part of the day moving sideways above 97.50, turned south and was last down 0.16% on the day at 97.42.
Focus shifts to European politics
On the other hand, political turmoil in Europe amid heightened odds of a snap election in Italy could make it difficult for the shared currency to add to its gains in the near-term.
Commenting on this development, "Polls suggest a significant gain for Lega and loss for M5S, but no part with an absolute majority. The odds are higher though than we end up with a new government entirely composed of the right-wing, lead by Lega," said TD Securities analysts.
"While EUR and Italian assets have taken this poorly, it would actually seem more likely this can spur more stability and less spending in the new government than at present, given the need to not please two parties with very different budget priorities.”
Technical outlook by FXStreet Analyst Yohay Elam
EUR/USD is suffering from downside momentum on the daily chart and has failed in its attempts to break above the 50 and 100-day Simple Moving Averages. The pair also remains below the 200 SMA.
Overall, bears are in control.
1.1180 provides some support after limiting the falls in August and also in mid-June. A more significant cushion awaits at 1.1165, which capped EUR/USD in early August. 1.1145 is a weak support line that worked as such in May. The former double-bottom of 1.1110 held it up twice in April and then in May. The next line is critical – the 2019 trough at 1.1027. The following line is 1.0900.
Some resistance awaits at 1.1250, which is the highest level in August so far. The triple-top of 1.1285, which has limited held EUR/USD down in mid-July is next. 1.1325 was the high point in April, and it is followed by 1.1345 that worked as both support and resistance in May. Next, we find 1.1390 and 1.1410.