- EUR/USD remains on the defensive near 1.1100.
- The greenback keeps the bid tone unchanged above 98.00.
- Advanced Spanish CPI came in below consensus in July.
The offered bias around the European currency stays unchanged so far on Monday and is now taking EUR/USD to the 1.1115/10 band, or daily lows.
EUR/USD focused on FOMC, data
The pair is adding losses to Friday’s negative price action following the rejection of the ECB-led spike to the 1.1180/90 band on Thursday.
Solid prints from the US Q2 GDP on Friday lent extra wings to the buck and sustained further the rally in DXY above the critical 98.00 mark, in turn putting spot under further downside pressure.
In addition, investors remain (very) bearish on EUR as speculations that the ECB could deliver a package of accommodative measures at the September meeting remain on the rise and are expected to keep buyers at bay for the time being.
Later in the week, the pair is seen under scrutiny in light of the release of advanced CPI and Q2 GDP figures in Euroland along with the FOMC meeting and US Non-farm Payrolls.
What to look for around EUR
The single currency is expected to remain under scrutiny in the next weeks amidst ECB’s preparations for a fresh wave of monetary stimulus, including a potential reduction of interest rates, the re-start of the QE programme and a probable tiered deposit rate system. The ECB has already changed its forward guidance and it now expects rates to remain at ‘present or lower levels’ until at least mid-2020. The unremitting deterioration of the economic outlook in the region and the lack of traction in inflation are seen limiting any occasional bullish attempts in EUR for the time being and also give extra sustain to the dovish stance in the ECB.
EUR/USD levels to watch
At the moment, the pair is losing 0.06% at 1.1118 and faces immediate contention at 1.1101 (2019 low Jul.25) seconded by 1.1021 (high May 8 2017) and finally 1.0839 (monthly low May 11 2017). On the upside, a break above 1.1234 (55-day SMA) would target 1.1286 (high Jul.11) en route to 1.1305 (200-day SMA).
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