EUR/USD: Defends 100-day MA support, focus on Draghi and stock markets

• EUR/USD defended 100-day moving average (MA) support in Asia, likely due to conciliatory comments from China's commerce minister.
• A bigger rally above 1.17 could be on the cards if ECB's Draghi plays down risks arising out of trade wars and the stock markets pick up a strong bid.

The EUR/USD defended the 100-day MA support of 1.1669 in Asia and was last seen trading just above 1.17.

The recovery is likely associated with conciliatory comments from China's commerce minister. More importantly, the risk assets seem to have taken heart from the fact that the Trump administration imposed a 10 percent tariff on Chinese imports worth $200 billion as opposed to expectations of 25 percent levy.

This is evident from the recovery in the JPY crosses. For instance, the EUR/JPY pair witnessed a 70 pip recovery from session lows in Asia and could extend gains further if the global stock markets pick up a strong bid, although odds of a big risk-on move are quite low, as the prospects of a breakthrough deal between the US and China are quite low.

The EUR/USD may also find acceptance above 1.17 if the European Central Bank (ECB) President Draghi downplays the trade tensions and reiterates that the QE program will likely end in December.

EUR/USD Technical Levels

Resistance: 1.1722 (Sept. 14 high), 1.1751 (July 23 high), 1.1852 (June 14 high)

Support: 1.1669 (100-day moving average), 1.1631 (10-day moving average), 1.16 (psychological support)