Search ForexCrunch
  • EUR/USD clinches tops near 1.1180, deflates afterwards.
  • Brexit negotiations remains in centre stage.
  • DXY trades steady near 97.20, off daily highs.

The shared currency keeps the familiar range so far at the beginning of the week, prompting EUR/USD to gyrate around the 1.1160 region.

EUR/USD focused on risk trends

Spot is struggling to extend the rally for the fifth consecutive session on Monday despite climbing to fresh 2-month highs just below 1.1180 earlier in the session.

The steady-to-bearish fashion around the Greenback and rising expectations around a final positive outcome in the Brexit process continue to sustain the upbeat sentiment in EUR and the rest of the risk complex.

Additionally, the US-China trade front remains another source of tailwinds for EUR after US Secretary S.Mnuchin hinted at the likeliness that US tariffs on Chinese products due to kick in in December could be lifted if talks go well.

In the docket, earlier in the day German Producer Prices rose 0.1% MoM and contracted 0.1% on a year to September, both prints coming in above estimates. Later in the week, EUR should remain under the microscope in light of the ECB event and the release of advanced PMIs in core Euroland.

What to look for around EUR

The upside momentum in the pair has extended to the vicinity of the 1.1200 area last week against the backdrop of a weaker Dollar and optimism from the Brexit negotiations and the US-China trade front. However, it is worth recalling that the recent positive 3-week streak in spot has been exclusively sponsored by the renewed offered bias in the Dollar and that the outlook in Euroland continues to deteriorate and 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. In addition, the possibility that the German economy could slip into recession in Q3 remains a palpable risk for the outlook and is expected to weigh on EUR in the short/medium term horizon.

EUR/USD levels to watch

At the moment, the pair is losing 0.09% at 1.1164 and a break below 1.1137 (100-day SMA) would target 1.1050 (55-day SMA) en route to 1.0925 (low Sep.3). On the upside, the next hurdle is located at 1.1171 (monthly high Oct.18) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1207 (200-day SMA).