- EUR/USD recovers the 1.10 level following Monday’s pullback.
- Geopolitics around Iran, the US and Saudi Arabia drive the global mood.
- German/EMU ZEW next of relevance in the docket.
The shared currency appears to have left behind the pessimism at the beginning of the week, with EUR/USD now managing to keep business above the key 1.10 the figure.
EUR/USD now looks to data
The pair could not sustain Thursday’s post-ECB ‘outside day’ and came under renewed and strong selling pressure on Monday amidst increasing geopolitical effervescence and the stronger demand for the Greenback.
Concerns over the global outlook have intensified following the drone attacks to Saudi oil facilities over the weekend, adding to the already uncertain US-China trade scenario – despite recent somewhat positive headlines. EUR also remains wary of the potential escalation in tensions around probable US tariffs on EU cars and parts.
Later in the session, the German/EMU ZEW survey will shed further details of the investors’ morale for the current month ahead of speeches by ECB’s Lane and Coeure.
Across the pond, the main focus will be on Industrial and Manufacturing Production figures seconded by the NAHB index and TIC Flows.
What to look for around EUR
The selling interest around the single currency has resumed this week, forcing EUR/USD to re-test the 1.10 neighbourhood and a tad below on Monday. In fact, EUR lost some shine following the recent peaks beyond 1.11 the figure, recorded after the ECB announced €20 billion/month in bond purchases under the re-launched QE programme. The occasional recovery in spot, however, is seen as corrective only always against the backdrop of unremitting slowdown in the region, looser for longer monetary conditions by the ECB and the likelihood that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.
EUR/USD levels to watch
At the moment, the pair is gaining 0.11% at 1.1011 and faces the next hurdle at 1.1109 (monthly high Sep.13) seconded by 1.1163 (high Aug.26) and finally 1.1179 (100-day SMA). On the flip side, a break below 1.0990 (low Sep.16) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017).
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