EURUSD turned lower on Wednesday after two days of gains. The euro struggles to get back above the 200-DMA since rejection from four-month highs around 1.12 in the second half of last week. The pair registered session lows at 1.1125 and remains in the lower part of the daily trading range after the release of economic updates out of Germany.
Germany November PPI came in at 0.0% versus +0.1% expected. As such, the report confirmed that producer prices remain stagnant on a monthly basis. By the way, the annual reading pointed to further weakening as the decline was the quickest in over three years. Meanwhile, according to German IFO survey results, the business climate index arrived at 96.3 on December, up from 95.0 last month and higher than 95.5 expected. The current economic assessment came in at 98.8 versus 98.1 anticipated and 97.9 previously. Expectation index rose from 92.1 to 93.8 versus market expectations of 93.0. the survey however did little to substantially ease concerns over the health and the outlook for the Europe’s largest economy.
Despite all the three components of the survey exceeded forecasts, the euro failed to capitalize on the report but managed to recover a bit from daily lows. The sentiment in the pair is still driven by the overall market trends, with signs of caution in the financial markets capping further upside attempts now. Investors express concerns over a potential no-Brexit deal and also nervously await signing of a US-China phase one trade deal. Should safe-haven demand persist in the short term, the common currency will further struggle around the current levels and could even extend losses if dollar demand picks up.
Technically, EURUSD remains within a short-term bullish trend as long as the prices hold above the 100-DMA around 1.1060. on the other hand, the inability to firmly regain the 100-DMA could lead to a more pronounced downside correction. On the upside, the 1.12 figure remains the key obstacle for bulls and the single currency will need to see a significant bullish driver to challenge this barrier and make a sustainable break above it.