EUR/USD fades the spike to 1.1060 ahead of EMU CPI

• EUR/USD moves higher on German stimulus rumour.
• The Greenback rebounds from earlier weekly lows.
• US Retail Sales, Beige Book next of relevance.

After attempting another test of monthly highs in the 1.1060 region, EUR/USD run out of steam and it has receded to the 1.1030 area.

EUR/USD propped up by German news

The pair has managed to gather extra upside traction after news agency Bloomberg said German officials has hinted at the likelihood that the government could pump in some fiscal stimulus measures in case the economic outlook deteriorates further.

The up move, however, was short-lived, as bulls failed to push spot further north of monthly peaks in the 1.1060/65 band.

Also adding to the somewhat downbeat sentiment in the pair, the Greenback has rebounded from weekly lows on the back of fading optimism of a breakthrough in the Brexit negotiations, as per latest news from Number 10.

Data wise in Euroland, final September CPI figures are unlikely to move the sentiment dial among investors. Across the pond, instead, all the attention will be on the publication of September’s Retail Sales along with Business Inventories, the NAHB index, TIC Flows and the release of the Fed’s Beige Book.

What to look for around EUR

The corrective upside remains well in place for the time being although well capped by the 1.1060 region amidst alternating mood in the risk trends and a steady performance from the Greenback. Looking at the broader picture, the relentless slowdown in the region does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the longer run. On another front, the Brexit process and its impact on the risk-associated complex is also affecting the price action around the pair while sporadic rumours of German fiscal stimulus also add volatility to the market.

EUR/USD levels to watch

At the moment, the pair is gaining 0.03% at 1.1036 and faces the next barrier at 1.1062 (monthly high Oct.11) seconded by 1.1109 (monthly high Sep.13) and finally 1.1139 (100-day SMA). On the flip side, a break below 1.0984 (21-day SMA) would target 1.0879 (2019 low Oct.1) en route to 1.0839 (monthly low May 11 2017).