Bears maintain pressure as risk aversion prevails

EUR/USD Current Price: 1.0974

• Sour market sentiment caps euro gains despite encouraging German numbers.
• The negative tone in global equities is leading the way amid a tight macroeconomic calendar.
• EUR/USD continues to find sellers ahead of 1.1000, risk tilts to the downside.

EUR/USD continues to trade at familiar levels on Tuesday, meeting sellers ahead of the 1.1000 mark. The euro received little or no attention despite encouraging data from Germany as the country released August industrial production, which rose 2.9% this month, much better than the 0.8% expected by market players . Compared to a year earlier, however, industrial production fell by 2.7%, still better than the previous -5.3%.

The weak performance of global equities is limiting high-yield advances. Asian and European indexes fell following Wall Street’s decline on Monday, the latter led by a sell-off in technology. Sentiment also soured amid lingering tensions in the Middle East and growing speculation that the healthy state of the United States (US) economy is healthy enough to limit future Federal Reserve (Fed) interest rate cuts.

Ahead of the US open, the country released its August Trade Balance of Goods and Services, which showed a deficit of $70.4 billion, better than the -$70.6 billion anticipated. The US session will bring little interest, with several Fed speakers scheduled throughout the session.

EUR/USD short-term technical outlook

Technically, the EUR/USD pair is still struggling with a broken daily uptrend line earlier in the week. The line acts as dynamic resistance, a handful of pips above the current level, with short-term spikes beyond it being quickly rejected by sellers. Technically, the daily chart shows that the technical indicators have lost their directional strength, but are consolidating in negative levels with no signs of a potential recovery underway. At the same time, the 20 Simple Moving Average (SMA) is heading marginally higher above the current level, while a flat 100 SMA provides support around 1.0930.

On the 4-hour chart, however, the technical picture is bearish. A simple moving average (SMA) of 20 approaches the aforementioned trend line, reinforcing its relevance as resistance and containing advances. Even more, the 100 and 200 SMAs are gaining downward traction well above the shortest, reflecting persistent selling interest. Finally, the technical indicators turned south, maintaining their downslope in negatives and favoring another leg to the south.

Support levels: 1.0960 1.0920 1.0885

Resistance levels: 1.0990 1.1040 1.1085