The Euro once again failed to impress buyers, as it dived again yesterday against the US dollar. The EURUSD pair traded below the 1.3560 support area, as the market sentiment tilted in favor of the Euro sellers. There were important economic releases scheduled yesterday, which impacted the EURUSD and initiated decline in the pair. The highlight of the day was the German ZEW economic sentiment, which registered a heavy decline. The Euro fell sharply after the release and traded lower towards the 1.3350 level. The Euro not only traded lower against the US dollar, but fell lower against the British pound as well.
German ZEW Economic Sentiment
The German indicator of economic sentiment was released during the London session yesterday. The market was expecting a decline from 27.1 to 18.2. However, the outcome was horrible as the German ZEW economic sentiment fell to 8.6. It was down by 18.5, which is one of the sharpest declines in the recent times. The report mentioned that this was the eighth consecutive decline, and at its lowest level since December 2012. The main reason for the decline was connected to the ongoing geopolitical tensions that have affected the German economy.
The EURUSD pair traded lower and broke the 1.3350 level to as low as 1.3332 during the late London session.
Euro Zone ZEW Economic Sentiment
The Euro zone indicator of economic sentiment was also released during the London session yesterday. The market was expecting a decline from 48.1 to 41.3. However, the outcome was very disappointing as the Euro zone indicator of economic sentiment fell to 23.7. Moreover, the Euro Zone The indicator for the current economic situation fell in August by 2.3 points to a value of minus 33.8 points. This was also on the disappointing side, and weighed on the EURUSD pair in the short term.
US NFIB Business Optimism Index
The US NFIB business optimism index was released during the NY session yesterday. The forecast was a rise from 95.0 to 95.3. However, the outcome was higher, and registered a reading of 95.7. This further added pressure on the Euro, but it was short lived, as the EURUSD pair managed to recover above the 1.3350 level. The report mentioned that there was little change in the 10 Index components other than outlook for expansion and business conditions which accounted for the small gain in the Index.
Technically, as mentioned earlier the 1.3320-00 holds a lot of importance for the EURUSD pair. As long as the pair is trading above the stated levels, a short term correction cannot be denied. If the pair breaks, then the next level of interest will be around the 1.3250 level. On the upside, initial resistance can be seen around the 1.3410 level. Any further gains can take the pair higher towards the 1.3440 level.
So, keep an eye on all the important levels friends and trade accordingly.
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