- EUR/USD rebounds from recent lows near 1.1070.
- Markets’ attention remains on Brexit.
- German Import Prices rose more than expected in September.
After dropping to lows near 1.1070 on Friday, EUR/USD is now attempting a mild rebound to the 1.1085/90 band following the opening bell in Euroland.
EUR/USD looks to data, Brexit, FOMC
The pair is trading on a firm note at the beginning of the week, reversing two consecutive daily pullbacks and re-shifting its attention to the key barrier at 1.1100 the figure.
Price action in EUR keeps looking to events from the Brexit negotiation as the main driver in the near term, which faces a key week in light of the EU decision on a delay of the Brexit deadline and the probable call for earlier elections in the UK.
In the meantime, the resumption of the bearish note in spot has been underpinned by the ‘slap of reality’ following the ECB event last week. In addition, the ECB’s Survey of Professional Forecasters (SPF) revised lower the outlook for economic growth and inflation in the region for the 2019-2021 period.
In the data space, German Import Prices rose more than expected during last month, while ECB’s M3 Money Supply figures are due later. In addition, President Draghi will speak at his farewell event, although he is unlikely to talk about monetary policy.
What to look for around EUR
Renewed weakness around the single currency dragged spot to fresh lows in the 1.1070 region, where it is now looking to rebound from. Despite the recent rally in spot has been exclusively sponsored by weakness in the Dollar, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. In addition, the possibility that the German economy could slip into recession in Q3 remains a palpable risk for the outlook and is expected to weigh on EUR in the short/medium term horizon.
EUR/USD levels to watch
At the moment, the pair is gaining 0.09% at 1.1089 and faces the next up barrier at 1.1128 (100-day SMA) seconded by 1.1171 (monthly high Oct.18) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally). On the other hand, a breach of 1.1072 (low Oct.25) would target 1.1041 (55-day SMA) en route to 1.0925 (low Sep.3).
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