EURUSD is starting to trend lower and move inside a descending channel formation. Price is bouncing off support and might be due for a test of the resistance at the 1.1800 major psychological level.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is narrowing to signal a potential upside crossover. If so, bulls could return to the game and push for an upside break of resistance.
Stochastic is heading higher to show that bullish momentum is still in play. This oscillator is already nearing overbought levels to signal rally exhaustion. In that case, the moving averages around the middle of the range could hold as resistance and trigger another move back to support.
Euro zone data turned out weaker than expected in the previous session as Germany printed a 0.6% expansion for Q2 versus the projected 0.7% growth figure. French and Italian banks were closed for the holiday so there were no other reports to prop up the shared currency.
Meanwhile, the US dollar drew strong support from upbeat retail sales and Empire State manufacturing index. Not only did the July figures beat expectations but the June report also enjoyed upgrades. Import prices came in line with estimates of a 0.1% uptick.
The euro region’s flash GDP is due today and analysts are expecting to see another 0.6% growth figure. The US has its FOMC minutes lined up and any remarks downplaying the odds of a September hike could be dollar bearish.