EUR/USD testing daily lows near 1.1900

The US dollar remains strong in the market supported by better-than-expected US economic data. EUR/USD continues to be under pressure, trading at daily lows. It bottomed at 1.1893, the lowest since Friday and then it bounced to the upside, finding resistance quickly at 1.1940. 

US data gave more strength to the correction that is under place from 2-year highs that EUR/USD reached yesterday at 1.2070. The euro dropped more than 150 pips during the last 24 hours and erased weekly gains. 

The intraday tone continues to favor the greenback, however, on a wider perspective, the main trend still points to the upside. The euro needs to rise back and hold on top of 1.2000 to regain the initiative. 

Data favors USD 

Among today’s economic releases was German inflation, that showed an increase in the CPI of 0.1% in August, with the annual rate at 1.8%. According to Carsten Brzeski, Chief Economist at ING, that data could be good news for the European Central Bank increasing the likelihood that tomorrow Eurozone CPI data will also show an increase. He added: “a slight increase in German inflation should bring some relief ahead of next week’s ECB meeting, amidst speculation about the ECB’s possible reaction to the stronger euro.”

In the US, first came the ADP report that showed an increase in private employment in August of 237K, significantly above the 185K expected (the report also included positive revisions for July).  Afterwards came the second reading of Q2 GDP growth that was revised higher to 3.0% (above the previous 2.6% and on top of the 2.7% of market consensus). 

US: Real GDP increased at an annual rate of 3.0% in second quarter of 2017

Both numbers boosted the recovery of the greenback that is moving away yesterday’s lows. The Dollar Index climbed to 92.70, after trading under 91.50 yesterday. 

EUR/USD technical levels 

To the upside resistance levels might be seen at 1.1940, 1.1985 (daily high) and 1.2020. On the flip side, support could be located at 1.1890 (daily low), 1.1830 (Aug 21 high) and 1.1770 (Aug 25 low).