EUR regained momentum recently while USD was struggling for gains following worse-than-expected economic reports posted last week.
The eurozone's economy has signaled some improvement. So, positive fundamentals indicate that the slowdown is coming to an end but it is still early to judge about it. Despite positive changes in the eurozone's economy, ECB's chief economist Praet thinks that the eurozone needs to make joint efforts to maintain momentum. The ECB is planning long-term measures to tackle the economic slowdown problem.
This week, not many macroeconomic reports are posted in the eurozone. On Wednesday, Germany is to present a Prelim GDP report which is expected to increase to 0.4% from the previous value of 0.0% and Flash GDP is expected to be unchanged at 0.4%.
On the USD side, recently Fed officials made mixed remarks on the current economic state of affairs. Due to the US-China trade dispute, Fed official Bostic warns that consumers will feel the hit of higher import tariffs while the inflation is quite low. Contrary to Fed's expectations, consumer inflation has been too weak trying to achieve the 2% target. Bostic cautioned about the situation where the price pressure may push inflation higher which might be unbearable for mass consumers.
Fed official Williams recently stated that the US economy has been on a sound footing despite trade war tensions. The optimistic statement from Williams improved market sentiment towards USD. However, the market is still not convinced about the steady growth momentum in the US economy as US President Donald Trump has already raised tariffs from 10% to 25% on Chinese imports worth nearly $300 billion.
This week US Retail Sales report is going to be published which is expected to conract to 0.2% from the previous value of 1.6%. Today FOMC member Clarida is going to speak about the short-term interest rates and monetary policy decisions.
Meanwhile, EUR is more optimistic than USD currently. However, any positive reading in the US reports may encourage further strength of USD. Otherwise, the price is expected to correct itself in a volatile manner in the coming days.
Now let us look at the technical view. The price is currently stuck below 1.1300 while rejecting off the mid-point of 1.1250 from where it is expected to trade lower. Though the bearish pressure is still unconfirmed, a daily close below 1.1200 is expected to help the bearish momentum strengthen further with a target towards 1.1000-50 support area in the coming days. As the price remains below 1.1300 area with a daily close, the bearish bias is expected to continue.
