Bears Dominate Market as Risk Aversion Takes Hold
The global stock market is experiencing a negative trend, heavily influenced by a sparse macroeconomic calendar. On Tuesday, the EUR/USD currency pair continues to encounter selling pressure just below the significant 1.1000 level. Despite positive German economic data, the Euro remains largely ignored. Germany's August Industrial Production showed a notable increase of 2.9%, surpassing the expected 0.8%. However, when compared to the previous year, there was a decline of 2.7%, although this was an improvement from the prior year's -5.3%.
The underperformance of global stocks is hindering the potential for high-yielding investments. Following a decline on Wall Street, Asian and European indexes also fell, primarily due to a sell-off in technology stocks. The market sentiment has been further dampened by ongoing tensions in the Middle East and speculation that the robust state of the US economy may limit forthcoming interest rate cuts by the Federal Reserve (Fed).
Before the US market opens, the August Goods and Services Trade Balance was released, showing a deficit of $70.4 billion, which was better than the anticipated $70.6 billion. The American trading session is expected to be quiet, with only a few Fed speakers scheduled to address the market.
From a technical standpoint, the EUR/USD pair is struggling against a daily ascending trend line that was breached earlier in the week. This line now serves as dynamic resistance, positioned just above the current trading level, with any attempts to break through being swiftly countered by sellers. The daily chart indicates that technical indicators have lost their upward momentum and are consolidating within negative territory, showing no signs of a recovery. Meanwhile, the 20 Simple Moving Average (SMA) is slightly above the current price, while a flat 100 SMA offers support around the 1.0930 mark.
In the 4-hour chart, the bearish outlook is reinforced. The bearish 20 SMA approaches the previously mentioned trend line, emphasizing its role as resistance and curbing any upward movements. Additionally, the 100 and 200 SMAs are trending downward, indicating persistent selling pressure. Technical indicators are also trending lower, maintaining their downward trajectory within negative levels, suggesting the potential for further declines ahead.