EUR/USD around 1.1000 post-US CPI, looks to Powell

• EUR/USD fades the spike to 1.1020.
• US CPI came in above estimates at 0.4% MoM.
• Fed’s J.Powell will testify before Congress later in the day.

The shared currency remains under pressure today despite some earlier rebound, keeping EUR/USD subdued near the key support at 1.10 the figure.

EUR/USD now shifts the focus to Powell

Spot exchanges gains with losses on Wednesday but remains overall on the defensive near the 1.1000 neighbourhood on the back of the persistent bid tone in the dollar and lack of further news on the US-China trade front.

Indeed, markets’ attention have shifted to the risk-off trade today in response to the lack of further details on the US-China ‘Phase One’ deal, tariffs and a Trump-Xi meeting following President Trump’s speech on Tuesday, all echoing in higher US yields and renewed demand for the safe haven space.

In the docket, earlier better-than-expected Industrial Production figures in Euroland during October gave ephemeral respite to the pair, which run out of steam in the 1.1020 region.

Across the pond, the greenback manages to keep the positive note after inflation figures tracked by the CPI rose at a monthly 0.4% during last month and 1.8% from a year earlier, both prints surpassing estimates. The Core CPI rose 0.2% MoM and 2.3% over the last twelve months.

Later in the day, Chief J.Powell will testify before the Joint Economic Committee, keeping the buck in centre stage.

What to look for around EUR

The selling mood in the euro has intensified and dragged spot to fresh 4-week lows in the 1.1000 region. As usual, the firm note in the greenback and developments from the US-China trade scenario are expected to dictate the mood around the pair for the time being. On the macro view, 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 further on EUR in the short/medium term horizon.

EUR/USD levels to watch

At the moment, the pair is retreating 0.01% at 1.1007 and a break below 1.0999 (monthly low Nov.13) would target 1.0925 (low Sep.3) en route to 1.0879 (2019 low Oct.1). On the upside, the next hurdle lines up at 1.1036 (55-day SMA) followed by 1.1102 (100-day SMA) and finally 1.1179 (monthly high Oct.21).