EUR/USD May Fall US Consumer Confidence, German GDP Data
The Greenback may rise against the Euro if US consumer confidence data undermines optimism about future demand. Consumption accounts for 70 percent of the economy, so an erosion in the underlying inclination to spend more could negatively impact inflation and growth prospects. In Germany, if finalized GDP data misses estimates, it could pressure the Euro as the continent continues to show increasing economic weakness.
As Europe’s proverbial “steam engine”, Germany is a power node of economic activity within a regional hub that constitutes one of three major pillars in the global economy. Weakening demand there is also already rippling out into the continent and negatively impacting member states and perimeter economies – like Sweden and Norway. A poor GDP reading could pressure the Euro and send USD higher if risk aversion is induced.
EUR/USD TECHNICAL ANALYSIS
The pair is currently sitting inside an 18-month descending resistance channel (red zone) as the pair continue to seesaw between treating the ceiling as resistance and support. In the upcoming session, EUR/USD may test the lower lip of support. However, we may not see major price moves until the publication of US Q2 GDP and personal consumption data.
Having said that, given the fundamental outlook and growing strength of the US Dollar, the path of least resistance for the pair suggests it favors a downside bias.
CHART OF THE DAY: Don’t be fooled by the short-term chart: EUR/USD downtrend remains strong despite a marginal uptick
EUR/USD chart created using TradingView
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