- EUR/USD loses the grip and drops to 1.1020.
- The better tone in USD stays behind the down move.
- Upside in the pair seen around 1.1100/10 so far.
The selling bias around the europen currency is gathering extra traction and is dragging EUR/USD to fresh daily/weekly lows in the vicinity of 1.1020.
EUR/USD weaker on USD-buying
After briefly testing the key resistance line just above 1.1100 the figure on Friday, the pair saw the selling pressure re-emerge in tandem with some risk-off tone following the developments in Saudi Arabia over the weekend.
Further out, yields of the German 10-year benchmark have faded part of the recent recovery and are now navigating daily lows near -0.48%.
In addition, market chatter regarding the possibility of tariffs on US imports of EU cars appears to have resurfaced and is also weighing on the sentiment surrounding the shared currency.
Nothing worth mentioning in the euro docket, while across the pond the NY Empire State manufacturing index receded to 2.0 for the current month, also coming in short of forecasts.
News from the speculative community noted EUR net shorts climbed to six-week highs during the week ended on September 10 according to the latest CFTC report, all against the backdrop of the expected dovish tone from the European Central Bank (ECB).
What to look for around EUR
The buying interest around the single currency has picked up extra pace as of late, pushing EUR/USD to levels beyond the 1.11 barrier, where it lost some impetus. In fact, EUR managed to regain poise after the announced €20 billion/month in bond purchases under the re-launched QE programme came in somewhat short of expectations. The ongoing recovery in spot, however, is seen as corrective only always against the backdrop of unremitting slowdown in the region, looser for longer monetary conditions by the ECB and the likelihood that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.
EUR/USD levels to watch
At the moment, the pair is retreating 0.46% at 1.1021 and a breach of 1.1018 (low Sep.16) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017). On the upside, the next hurdle aligns at 1.1109 (monthly high Sep.13) seconded by 1.1163 (high Aug.26) and finally 1.1182 (100-day SMA).
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