US dollar bulls back off in search of risk

The euro is powering higher, led by improving German trade, while sterling tamely backs off its recent highs.

Source: Bloomberg

Euro supported by positive German data

EUR/USD is trading at 1.1339, up 0.24% at the London open on Monday, following the release of better-than-expected trade balance data from Germany. A print of 21.8 billion beat expectations of 18.3 billion, and was up from its previous level of 17.9 billion (revised form 17.7 billion). Having touched an overnight low of 1.1290, EUR/USD rallied to its current level, where it is likely to come under some resistance from the pair’s 200-hour moving average, currently placed at 1.1363. Should topside be broken then we are a likely to see a leg higher, with targets at the 100-hour moving average (1.1398), which if offered sustained support could see a re-testing of 1.1440. However, should bears continue to win over bulls and the 200-hour moving average hold, then a re-testing of the overnight lows of $1.1290 is likely, and if this is broken we could see a move lower to the 1.1186 level.

EUR/USD chart

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Sterling breaks below key support

GBP/USD is currently trading at 1.5231, down 0.06%, on Monday following an address from the Bank of England governor, Mark Carney at the G20 summit in Turkey, in which he omitted any comments on the UK economy or sterling, but rather championed increased banking regulation (Banks -1.4%). Sterling has come off its Friday highs of 1.5352, breaking down through its 50-hour moving average (1.5283), which is now likely to turn into resistance. If held, this could see a further move lower, with the pair’s 100-hour moving average coming into crosshairs at 1.5222 – a move supported by a reading of 41 in the pair’s relative strength index (RSI) on an hourly timeframe. However, should downside support be offered at the pair’s 100-hour moving average at 1.5222, then it’s likely that a re-testing of previous topside resistance, currently at 1.5283, will be brought back into play.

GBP/USD chart

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