- EUR/USD comes under pressure and tests the sub-1.18 area.
- ECB’s Christine Lagarde and other board members due to speak later.
- Markets’ focus will be on the EU Summit on Thursday and Friday.
The single currency starts the week on a soft note and forces EUR/USD to give away recent gains and slip back below the 1.1800 mark.
EUR/USD looks to dollar, ECB
Following Friday’s move to new 2-week highs in the 1.1830 region, EUR/USD meets some selling bias at the beginning of the week and re-visits, albeit briefly, levels below 1.1800 the figure.
In fact, the corrective upside in the buck comes amidst the generalized cautious note surrounding the riskier assets and some mild bias towards the risk aversion ahead of the speech by ECB’s Lagarde later in the session as well as the crucial EU Summit on October 15-16.
Later in the session and apart from Lagarde, Luis De Guindos, Fabio Panetta and Isabel Schnabel are also due to speak in an otherwise empty euro docket.
What to look for around EUR
EUR/USD has finally surpassed the 1.1800 yardstick although the up move run out of steam in the 1.1830 region so far. The pair’s outlook still remains constructive and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far cautious stance from the ECB and the solid position of the EMU’s current account.
EUR/USD levels to watch
At the moment, the pair is losing 0.20% at 1.1805 and faces immediate contention at 1.1709 (38.2% Fibo of the 2017-2018 rally) seconded by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9). On the upside, a break above 1.1830 (weekly high Oct.6) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18).
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