Euro reacts against the dollar on positive data in Europe

The euro is trading higher after finding support at the 1.1785 area and recovering to the area around 1.1800. 

Investors enthusiastically welcomed economic data in Europe that turned out to be better than expected.

Likewise, market sentiment has benefited from news about harmonization of the tariff negotiations between United States and Chinese leaders.

Europe offers better economic numbers than expected

In Germany, the gross domestic product dropped by 9.7 percent in the second quarter of the year. The market expects a sharp drop, almost reaching 10%. 

The same happened in the second quarter’s inter-annual GDP. It dropped by 11.3 percent compared to the same period in the previous year. However, it has been a softer fall than the 11.7 percent expected by the market.

The IFO institute reported numbers that were better than expected. The IFO business climate rose from 90.4 in July to 92.6 in August, better than the 92.2 anticipated by the market. 

The current IFO rating recovered to 87.9 in August from 84.5 the previous month. The market expectation stood at a rate of only 86.9, though.

On the other hand, expectations have improved to 97.5 in August from 96.7 in July. However, that meant an improvement below the 98.0 that was expected by the market.

In the United States, new home sales increased by 13.9 percent in July. Home prices rose by 0.9 percent in June.

The EUR/USD chart continues to be mixed with some bearish stink.

After recovering initial losses to close the day in the positive yesterday, the dollar index is falling again thanks to the appetite for risk generated from news about the tariff negotiations between the United States and China.

The dollar remains contained by the barrier at 93.50 that was tested the previous week in the medium term. To the downside, supports were at 93.00, 92.50, and 92.10.