- EUR/USD loses the grip and slips back to the 1.1820 area.
- ECB’s C.Lagarde said the recovery lost traction in Q4.
- European Council Video Conference takes centre stage on Thursday.
The single currency eases further momentum and drags EUR/USD to news 3-day lows in the 1.1820 on Thursday.
EUR/USD weaker on ECB, looks to EU Conference
EUR/USD adds to Wednesday’s losses in the 1.1830 area following comments from ECB’s C.Lagarde. In fact, Lagarde said the region’s recovery lost momentum in the fourth quarter, particularly the services sector, all in response to the strong pick-up in infected cases.
In addition, Lagarde once again reiterated the need for both monetary and fiscal policy to work together, while she suggested the inflation to remain subdued until early 2021.
Later in the session, all the attention will be on the European Council Video Conference, where the EU Recovery Fund is expected to be on top of the agenda, mainly following the potential veto from Hungary and Poland.
Data wise in the region, the September’s Current Account figures are due along with Construction Output. In the US data space, the usual Claims will take centre stage followed by the Philly Fed index, Existing Home Sales, the CB Leading Index and the speech by Cleveland Fed L.Mester (voter, hawkish).
What to look for around EUR
EUR/USD once again failed to retest – let alone surpass – the 1.1900 level despite the favourable context in past sessions. In the very near-term, however, EUR/USD is expected to remain under scrutiny on the back of the impact of the pandemic on the region’s economy and developments around the Recovery Fund. In addition, the dovish stance from the ECB and the potential announcements of extra stimulus in December also collaborate in limiting the upside in the pair.
EUR/USD levels to watch
At the moment, the pair is losing 0.23% at 1.1824 and faces the next support at 1.1745 (weekly low Nov.11) followed by 1.1709 (Fibo level of the 2017-2018 rally) and finally 1.1602 (monthly low Nov.4). On the upside, a break above 1.1920 (monthly high Nov.9) would target 1.1965 (monthly high Aug.18) en route to 1.2011 (2020 high Sep.1).
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