Currency Analyst since 2010

EUR/USD: outlook for Aug. 29 - Sep. 4

EUR/USD declined last week closing below the July-August support line and 100-day MA at 1.1220. The decline was caused mainly by the strengthening of the US dollar.

The European fundamental factors don’t give the euro many reasons to rise either. There were some positive news from the region’s manufacturing sector, as German and euro zone’s manufacturing PMIs both pointed to expansion. However, German Ifo Business Climate dropped to 6-month low of 106.2 points in the August report. The nation’s economic growth slowed down from 0.7% in the 1st quarter to 0.4% in the 2nd quarter. Next week there will be more data releases from the euro area’s leading economy: retail sales, inflation and unemployment change. The euro area will publish inflation figures on Wednesday.

Technically it looks like after breaking support the euro may suffer further declines versus the greenback. Support is at 1.1140 and 1.1105 ahead of 1.1040. Strong resistance is in the 1.1250 area.

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