- EUR/USD loses further momentum and approaches 1.0990.
- The firm note in the Greenback picks up pace.
- ECB’s B.Coeure due to speak later in the day.
The selling bias in the European currency is now gathering extra steam and drags EUR/USD to the area of 1.0990, or fresh daily lows.
EUR/USD weaker on USD-buying
The pair is prolonging the weekly choppiness on Wednesday, always around the 1.10 area although with a bearish bias on the back of a moderate rebound in the demand for the buck.
EUR-bears appear now in control of the markets and face the next relevant support at weekly lows in the 1.0970/65 band. If this area is cleared, YTD lows near 1.0920 should be back on investors’ radar.
Additionally, market participants remain vigilant on any progress of the recently requested impeachment inquiry against President Trump as well as headlines from the US-China trade front ahead of the October talks.
Later in the session, ECB’s member B.Coeure is expected to participate in hearings in Berlin amidst a vacuum of data releases. Across the pond, MBA’s Mortgage Applications contracted at a weekly 10.1% ahead of the release of August’s New Home Sales and speeches by C.Evans and E.George.
What to look for around EUR
EUR is facing extra downside pressure at the beginning of the week and threatens to extend the move to 2019 lows in the 1.0920 region, as any recovery in the German economy appears to take longer than expected in light of the recent flash PMIs. The unremitting slowdown in the region justifies the looser for longer monetary conditions by the ECB and adds to the probability 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 losing 0.26% at 1.0991 and a break below 1.0966 (low Sep.23) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017). On the flip side, the initial hurdle emerges at 1.1026 (21-day SMA) followed by 1.1109 (monthly high Sep.13) and finally 1.1163 (high Aug.26).
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