Search ForexCrunch
  • EUR/USD sees fresh leg lower, as King dollar rules amid flight to safety.
  • Bears gathering pace for a test of May 2017 lows at 1.0840.
  • All eyes on ECB nominated President Lagarde’s speech, US data and trade news.

EUR/USD remains heavy near two-year lows ahead of the 1.09 handle, as the bears await the European Central Bank (ECB) nominated President Lagarde’s speech for the next push lower.

Lagarde to follow Draghi’s footsteps, EUR risks further falls

The selling interest around the spot remains unabated amid an ongoing upsurge in the US dollar across its main competitors, as renewed US-China trade friction coupled with Brexit chaos continue to boost the safe-haven of the buck. The US Dollar Index extended Monday’s rally and climbed to highest levels since May 2017 at 99.33, currently trading a few pips lower.

Meanwhile, the shared currency remains pressured amid deteriorating Eurozone economic situation, especially after the final Euro area Manufacturing PMIs highlighted that the Eurozone’s manufacturing recession  continued  for a seventh month in August.

Further, the US-China trade escalation and heightening Brexit uncertainty added to the Euro area growth concerns and boosted calls for aggressive European Central Bank (ECB) monetary policy easing when it meets next week. According to ECBWatch, Eurozone money markets are now pricing in a 60% chance a 20-bps Sept ECB rate cut versus a 10-bps rate cut previously expected.

All-in-all, the risks remain skewed to the downside in EUR/USD amid US-EU growth differential, trade worries and Italian political risks. Italy’s 5-Star Movement and opposition Democratic Party (PD) try hard to stitch together a new administration  after the previous government collapsed.

The focus also remains on the US ISM Manufacturing data and trade developments in the day while Lagarde’s speech will be closely eyed. Lagarde is due to speak in front of the  Committee on Economic and Monetary Affairs (ECON)  of the European Parliament in her capacity of Nominated President of the ECB.

EUR/USD Technical levels to consider