EURUSD trades higher today but off the daily highs as the rally that drove the pair above 1.19 looks like it running out of steam. We haven’t seen such a rally since the rebound from 2017 lows. The EU fundamentals don’t support the euro strength as the economic data from the old continent continue to disappoint. The EURUSD strength attributed to USD weakness as the coronavirus cases continue to rise in the USA.
Another set of dismal GDP data released today and first the Spain Gross Domestic Product plunged to -18.5%, well below the expectations of -16.1% for the second quarter. The France GDP registered in at -13.8%. The Italy Gross Domestic Product slumped to -18.7% in the second quarter. The European Monetary Union (EMU) Gross Domestic Product (GDP) seasonally-adjusted came in at -15% below the estimates of -14.5%.
The positive economic news came earlier today from Germany as the Retail Sales beat the expectations. June retail sales dropped 1.6% better than the market consensus estimates for a drop -3.3%. The yearly reading for the Retail Sales came in at 5.9% also beating the forecasts of 3%.
EURUSD Price Levels to Watch
EURUSD is 0.05% higher at 1.1849 as the pair makes fresh 26-month highs, as the July rally amid the USD weakness drove the pair today above the 1.19 mark for a few minutes.
Technically the EURUSD momentum is positive but the pair have entered overbought zone since July 21 without correction. The RSI (14) index trades above the 80 mark, and I expect soon to start a downward move. Above that, today’s reversal from the 1.19 mark also shows signs of exhaustion for the euro.
The common currency capped at 1.19. The top from May 18, at 1.1925 would provide the next supply zone. On the contrary, bears would love a close below the daily low at 1.1836. More bids might emerge at 1.1706 the low from July 29. The next support would be met at 1.1570 the low from July 24.