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  • DXY holds to significant losses, at weekly lows offering support to EUR/USD.
  • Federal Reserve announces it will start buying Treasury bills.  

The EUR/USD is hovering around 1.1050, consolidating modest daily gains. The Euro lost strength during the American session while the US dollar remains under pressure.  

Consolidating weekly gains  

“Risk-on has taken over the financial sphere these last couple of days, on encouraging news coming from the two big turmoil fronts, Brexit and the trade war between the US and China. The EUR/USD pair has advanced for a second consecutive week, recovering the 1.1000 threshold and rallying to 1.1062, on hopes both ships will reach good port”, explained Valeria Bednarik, Chief Analyst at FXStreet. According to her, the recovery is set to continue in the upcoming days.

From the weekly low, the EUR/USD rose more than a hundred pips. The key driver so far has been a slide of the US Dollar across the board. The DXY is having the worst week since August. As of writing, it stands at 98.31, down 0.40% for the day.  

Attention continues to be on the US/China trade talks. Market participants await for headlines. A positive outcome could reduce Federal Reserve rate cut expectations. The US central bank just announced it will begin buying $60B per month in Treasury bills at least until the second quarter of next year.  

Levels to watch  

Earlier today, the pair peaked at 1.1062, reaching the highest level in three weeks and then pulled back finding support above 1.1030 and also on top of the 20-hour moving average. It rebounded rising back to the 1.1050 zone.  

So far today, it tested the 1.1060 area several times but failed to break higher. Above daily highs, the next resistance is seen around 1.1075 (Sep 17 high) and 1.1110/05. On the flip side, support will likely emerge at 1.1030/35 (Oct 10 high) and 1.1000 (Oct 3 & 7 high / Oct 11 low).