- EUR/USD fades the uptick to 1.1780 and stabilizes near 1.1760.
- ECB Accounts noted the recent appreciation of the euro.
- US Initial Claims rose by 840K, missing initial estimates.
EUR/USD navigates without clear direction around the 1.1760/70 region in the second half of the week.
EUR/USD’s upside remains capped by 1.1800
Price action around EUR/USD remains inconclusive so far on Tuesday, following the rest of the global assets against the backdrop of the absence of relevant news or market movers.
On the ECB front, the publication of the central bank’s Accounts showed the recent appreciation of the exchange rate did not pass unnoticed among members of the Governing Council. Indeed, the higher exchange rate was behind the revision lower in the inflation outlook published in September. In addition, the Accounts noted that interest rate cuts and changes to the TLTROs conditions remain in the bank’s toolbox. The Accounts also noted a solid consensus among members that ample stimulus remained necessary.
In the docket, US Initial Claims rose by 840K on a weekly basis, coming in short of expectations (820K) and showing once again the lack of further progress in the US labour market.
What to look for around EUR
EUR/USD appears to have met a strong barrier in the 1.1800 area so far, where converge the 55-day SMA and just above the immediate resistance line. The pair’s outlook still remains constructive and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far cautious stance from the ECB and the solid position of the EMU’s current account.
EUR/USD levels to watch
At the moment, the pair is losing 0.01% at 1.1759 and faces immediate contention at 1.1709 (38.2% Fibo of the 2017-2018 rally) seconded by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9). On the other hand, a break above 1.1807 (weekly high Oct.6) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18).
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