Hot buying continues to defend the 1.0900 level

EUR/USD Current Price: 1.0942

• The German ZEW survey on economic sentiment surprised with rather discouraging figures.
• The US producer price index rose less than expected in July.
• EUR/USD is trading in a modest uptrend, it must clearly break above the 1.0950 resistance area.

EUR/USD remains locked on Tuesday, trading in a well-bounded range around 1.0920 since the day began. Absence of relevant data and upcoming headlines from the United States of America (US) keep investors cautious with little action at the FX level.

However, stock markets tell a different story. Speculative interest is still worried and moving away from high-yield stocks as most European indices trade in the red and hurt US futures. In addition, weaker government bond yields are limiting demand for the US dollar. The 10-year Treasury note is offering 3.89% after flirting with the 4% level a few days ago.

On the data front, Germany released its August ZEW Economic Sentiment Survey, which fell more than expected. The country’s index was printed at 19.2 after a reading of 41.8 in July, while Eurozone Economic Sentiment fell to 17.9 from 43.7 previously. In addition, Germany’s current situation rating fell to -77.3, worse than the -68.9 recorded in July. Across the pond, the US released the NFIB’s business optimism index, which rose to 93.7 in July, beating expectations.

Finally, the US producer price index (PPI) rose 0.1% month-on-month in July, in line with expectations, while annual growth was 2.2%, below expectations of 2.3% and below 2.7% previously. Annual core inflation at wholesale levels fell from 3% in June to 2.4%. The encouraging numbers put some pressure on the USD, with EUR/USD hovering around 1.0940 ahead of the Wall Street open.

EUR/USD short-term technical outlook

Technically, the daily chart for the EUR/USD pair shows risk is tilted to the upside, although momentum is missing. The pair continues to develop above all its moving averages, with the 20 Simple Moving Average (SMA) gaining upward traction well above the 100 and 200 SMA. At the same time, technical indicators turned northward within positive levels, albeit with warm slopes.

In the short term, and according to the 4-hour chart, the pair has room to extend its lead. Buyers are defending their downside around a flat 20 SMA, while despite the prevailing range, EUR/USD manages to make sporadic highs. At the same time, technical indicators remain in positive levels, albeit with uneven upward force.

Support levels: 1.0890 1.0845 1.0800

Resistance levels: 1.0950 1.1005 1.1045