The EUR/USD pair fell down to 1.1396 before recovering towards the 1.1500 level by the end of the day, as Wall Street reversed its intraday gains and closed the day 200 points down after having posted gains of nearly 450 points earlier in the day.
In short term, the pair seems to have found a short term bottom, as in the 1 hour chart, the technical indicators are recovering partially from near oversold levels, whilst the 100 SMA has advanced well above the 200 SMA, both below the current level, with the shortest offering a strong support around 1.1345.
In the 4 hours chart the price is recovering after a brief decline below its 20 SMA, whilst the technical indicators have erased their overbought readings, and now aim slightly higher, well above their mid-lines. Nevertheless, to confirm a stronger recovery, the pair needs to advance beyond 1.1500, the 61.8% retracement of Monday’s fall.
Meanwhile positive data came from Germany, with the final GDP figures for the second quarter of this year matched expectations and the previous review, increasing by 0.4% in the three months ending June and compared to the first quarter of the year, leaving the annual growth rate at 1.6%.
Additionally, the country released its IFO survey, which resulted above expectations in all of its readings. Expectations rose to 102.2 against expectations of 102.00, whilst the Business Climate surged to 108.3 vs. 107.7 expected.
Mid European morning, China’s central bank cut its benchmark lending rate for the fifth time in nine months and also lowered it RRR, quite an unusual movement, in another desperate attempt to control stocks, and prevent the economy from shrinking further.
US data resulted mixes, with sales of new homes up 5.4% in July, to 507,000 missing expectations of 520,000, whilst the Markit Services PMI resulted at 55.2 in August against the 56.0 expected, although Consumer confidence rebounded in August, printing 101.5 up from 91.0 in July.