EUR/USD: Indicators are not showing a clear bias – OCBC

Euro (EUR) was better bid as political concerns somewhat faded, and USD retreated. Last at 1.1675 levels.

Broader fundamentals should still support EUR

"The consistent rise in RMB past several key levels is also having a spillover effect onto other FX, including the EUR. Elsewhere, there are continuing signs that EU and US are potentially getting closer to a better deal. Last week, the U.S. and EU issued a joint statement on August 21 outlining their new trade framework. The deal confirms a 15% tariff ceiling on most EU goods, with a non-stackable clause that prevents additional duties being layered on top."

"Recent reports suggest that the EU is willing to waive all tariffs on industrial imports from the US in exchange for lower duties on its automobile exports to the country. US had earlier indicated that the blanket 15% tariff rate would apply to auto and auto parts imported in the US from the EU as well, back-dating to Aug. 1, if the EU passes the legislation of removing all tariffs on U.S. imports by the end of this month."

"EUR was modestly firmer. Daily momentum and RSI indicators are not showing a clear bias. Support at 1.1650/60 levels (21, 50 DMAs) and 1.1570 levels. Resistance at 1.1730, 1.18 levels. 2-way trades still likely; bias to buy dips. Risk is French confidence vote on budget on 8 Sep and Dutch elections in Oct. Political risks typically can weigh on EUR but broader fundamentals should still support EUR, on a buy on dips play."