EUR/USD flirting with daily highs around 1.1080

• EUR/USD returns to the upper end of the range near 1.1080.
• DXY recedes from tops in the vicinity of 97.90.
• US housing data came in on a mixed tone.

After bottoming out in the boundaries of 1.1060, EUR/USD has managed to regain some poise and is now testing daily highs in the 1.1080 area.

EUR/USD looks to USD for direction

The pair has returned to the positive territory on Monday after briefly testing lows in the 1.1060 region. However, a breakout of the current topside in the 1.1080/90 band remains elusive for the time being and is considered crucial in order to visit the 1.1100 neighbourhood and beyond.

On the USD-side, the pullback of the greenback from daily highs comes along another correction lower in US 10-year yields to the 1.80% area against the usual backdrop of US-China developments on the trade front. It is worth mentioning that these yields were hovering around 1.96% during last week.

In the data space and while investors wait for the ECB minutes and the speech by C.Lagarde later in the week, September’s Current Account surplus in Euroland shrunk a tad to €28.2 billion. Across the pond, Housing Starts expanded by 1.314M units (or 3.8%) during last month and Building Permits surpassed estimates expanding by 1.461M units (or 5.0%).

What to look for around EUR

Spot is prolonging the rebound from last week’s lows in sub-1.10 levels, always underpinned by the renewed weakness around the greenback and hopes of a US-China trade deal. The up move, however, seems to have met a tough hurdle in the 1.1080/90 band for the time being. On the macro view, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. In this regard, all the attention will be on the publication of flash PMIs for the current month later in the week.

EUR/USD levels to watch

At the moment, the pair is advancing 0.05% at 1.1077 and faces the next up barrier at 1.1081 (high Nov.19) followed by 1.1091 (100-day SMA) and finally 1.1179 (monthly high Oct.21). On the downside, a breach of 1.0989 (monthly low Nov.14) would target 1.0925 (low Sep.3) en route to 1.0879 (2019 low Oct.1).