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  • EUR/USD loses the grip further and approaches 1.1750.
  • Lagarde said the ECB remain attentive to the euro appreciation.
  • Fed’s J.Powell will testify on Tuesday, Wednesday and Thursday.

The selling pressure around the single currency is now picking up pace and is dragging EUR/USD to new lows in the 1.1760 region at the beginning of the week.

EUR/USD focused on Lagarde, waits for Powell

EUR/USD is adding to Friday’s losses below the key support at 1.18 the figure and threatens to revisit monthly lows in the 1.1740/35 band (September 17).

In the meantime, the leg lower in the pair remains sustained by renewed USD-buying in a context where investors remain biased towards the risk aversion.

Also weighing on the single currency, ECB’s Chief Christine Lagarde said the central bank remains attentive to the euro’s appreciation, reiterating at the same time that the ECB did not run out of ammunition and that a higher exchange rate put prices under downside pressure.

Nothing worth mentioning data wise in Euroland, whereas the Chicago Fed Activity Index surprised to the downside in August. Later in the NA session, FOMC’s permanent voter and (mega) dovish member Lael Brainard is due to speak.

Moving forward, the greenback is expected to remain in the centre of the debate later in the week in light of all three testimonies by Fed’s Jerome Powell (Tuesday, Wednesday and Thursday).

What to look for around EUR

EUR/USD dropped and recorded fresh monthly lows near 1.1740 following the FOMC gathering. Despite the move, the pair’s outlook remains positive and bouts of weakness are so far deemed as short-lived and look contained. In addition, the improved sentiment in the risk-associated universe, auspicious results from domestic fundamentals – which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis – as well as a calmer US-China trade front are all underpinning the constructive view on the single currency. The solid positive stance in the speculative community, the latest message from the ECB and the euro area’s current account position also collaborate with this view on the currency.

EUR/USD levels to watch

At the moment, the pair is losing 0.65% at 1.1765 and faces the next support at 1.1737 (monthly low Sep.17) seconded by 1.1709 (38.2% Fibo of the 2017-2018 rally) and finally 1.1695 (monthly low Aug.3). On the other hand, a break above 1.1917 (high Sep.10) would target 1.1965 (monthly high Aug.18) en route to 1.2011 (2020 high Sep.1).