The EUR/USD pair regained some positive traction on Wednesday and reversed a major part of the previous day’s retracement slide amid the emergence of some fresh selling around the US dollar. The US President Donald Trump spoofed investors by calling off stimulus talks with Democrats until after the November 3 presidential election. However, subsequent tweets from Trump, indicating that he would be open to gradual spending measures, changed the market sentiment, which, in turn, dented the greenback’s relative safe-haven status.
The shared currency seemed rather unaffected by disappointing German Industrial Production data, which showed that output unexpectedly contracted by 0.2% in August. On an annualized basis, the German Industrial Production was down 9.6% during the reported month as compared to a drop of 10.0% recorded in July.
From the US, the minutes of the September FOMC meeting revealed that policymakers generally agreed to adopt the next monetary policy framework. The summary stated that the upgrade in economic projections were conditioned on additional fiscal measures by the government and the lack of further stimulus would jeopardize the economic recovery that was moving faster than expected. The release, however, did little to provide any meaningful impetus and turned out to be a rather non-event for the markets.
Nevertheless, the pair finally settled with modest gains and held steady above mid-1.1700s through the Asian session on Thursday. Increasing prospects of a Democratic victory at the upcoming US elections in November revived hopes for more US stimulus, which remained supportive of the upbeat market mood and kept the USD bulls on the defensive. Market participants now look forward to the German trade balance and current account figures. The data, along with speeches by ECB’s De Guidnos, Mersch, and the release of the ECB meeting minutes will influence the common currency. Later during the early North American session, the US Initial Weekly Jobless Claims will also be looked upon for some trading impetus.
Short-term technical outlook
From a technical perspective, the emergence of some dip-buying near a one-month-old descending trend-channel resistance breakpoint favours bullish traders. That said, it will be prudent to wait for some strong follow-through buying beyond the 1.1800 mark before positioning for any further appreciating move. The pair might then accelerate the momentum towards the 61.8% Fibonacci level of the 1.2011-1.1612 downfall, around the 1.1865 region, before eventually aiming back to reclaim the 1.1900 round-figure mark.
On the flip side, the 1.1730-25 region now seems to have emerged as immediate support and is closely followed by the 1.1700 mark. The latter coincides with the 23.6% Fibo. level, which if broken decisively would turn the pair vulnerable to slide back towards the recent swing lows support, around the 1.1615-10 region.