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  • EUR/USD’s upside so far faltered in the vicinity of 1.1770.
  • ECB’s Christine Lagarde reiterated her concerns over low inflation.
  • US ADP employment report and flash Q2 GDP figures next in the docket.

The optimism around the European currency looks somewhat mitigated on Wednesday after the recent rebound in EUR/USD run out of steam near 1.1770, where coincides the 55-day SMA.

EUR/USD now looks to data

EUR/USD is down smalls following two consecutive daily advances and in the wake of the opening bell in Euroland on Wednesday. The ongoing knee-jerk comes in response to the so far mild recovery in the greenback.

The euro did not react to the speech by ECB’s President Christine Lagarde, who once again showed concerns regarding the lack of traction of the inflation in the region. In addition, Board member and Governor of the Bank of Estonia Madis Müller hinted at the idea that the economic recovery could slow its pace and at the same time he dialled down concerns over the strength of the exchange rate.

Later in the session, Italian preliminary inflation figures for the month of September are due seconded by the speech by the ECB’s Board member Philip Lane.

Across the pond, the focus of attention will be on the ADP report, seconded by another estimate of Q2 GDP figures, weekly MBA’s Mortgage Applications, Pending Home Sales and the speech by Minneapolis Fed Neel Kashkari (voter, dovish).

What to look for around EUR

EUR/USD appears to have met a strong hurdle in the 1.1770 region so far, area coincident with the 55-day SMA. 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 calm US-China trade front and the steady – albeit vigilant- stance from the ECB. The solid position of the EMU’s current account coupled with the favourable positioning of the speculative community also lends support to the shared currency.

EUR/USD levels to watch

At the moment, the pair is retreating 0.13% at 1.1726 and faces the next support at 1.1612 (monthly low Sep.25) seconded by 1.1495 (monthly high Mar.9) and finally 1.1447 (50% Fibo of the 2017-2018 rally). On the other hand, a breakout of 1.1755 (weekly high Sep.30) would target 1.1766 (55-day SMA) en route to 1.1917 (high Sep.10).