21DMA to yield – OCBC

The Euro (EUR) traded little changed overnight. Last seen at 1.1040 levels, note OCBC FX strategists Frances Cheung and Christopher Wong.

EUR/USD to trade below 1.1040

“Daily momentum is slightly bearish, while the RSI has declined. Support at 1.1040 (21 DMA), 1.10, 1.0930 (61.8% 2024 fibo retracement from high to low). Resistance at 1.12 (recent high) and 1.1280 (2023 high).”

“The slippage in CPI in the Eurozone, Germany and Spain and the weaker money production PMI print added to the expectation that the ECB could cut interest rates again at its upcoming meeting on September 12. Markets cut prices nearly 25bp at this meeting and about 37bp for the rest of the year (another 1.5 cut).”

“Another series of disappointing print data could move the needle for markets to price in a more accommodative ECB and the euro to trade lower. This week, the focus is on services PMI, PPI (Wednesday), retail sales (Thursday) and GDP (Friday).”