- EUR/USD fades the initial strength and moves below the 1.18 mark.
- Dollar-buying remains behind the correction lower in the pair.
- ECB’s Christine Lagarde speaks later on Monday.
The better start of the week in the greenback is forcing EUR/USD to recede to fresh 2-day lows in the sub-1.18 area on Monday.
EUR/USD focused on ECB, looks to USD
The continuation of the upside momentum in the greenback prompted sellers to keep the risk-associated assets under pressure at the beginning of the week, prolonging the downside bias sparked on Friday at the same time.
In fact, the dollar regains poise and advance well above the 93.00 mark when gauges by the US Dollar Index (DXY), or 2-day highs, in a context where the risk-off sentiment looks comfortable. Despite the move, the pair remains well immersed into a multi-day consolidative range.
Nothing scheduled data wise in Euroland on Monday, whereas the focus of attention will be on the participation of ECB’s C.Lagarde at an event later in the European afternoon.
Across the pond, the calendar is not much interesting either, with the Chicago Fed index only for release and the speech by FOMC’s L.Brainard.
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 0.42% at 1.1787 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).
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