- EUR/USD drops and bounces off 1.1110 on Tuesday.
- EMU Producer Prices next on the docket.
- US ISM Non-Manufacturing in the limelight later today.
After a brief drop to multi-day lows in the 1.1110 region, EUR/USD has managed to regain some buying interest and is now navigating the 1.1130/40 band.
EUR/USD focused on data, trade
Following a negative start of the week, the pair came under renewed downside pressure and is gyrating around the key 100-day SMA in the 1.1120 region amidst the moderate pick up in the sentiment surrounding the buck.
The selling bias has returned to the pair at the beginning of the week in response to positive headlines from the US-China trade front, which gave extra boost to US yields and sponsored outflows from the safe havens.
Later in the day, Producer Prices in Euroland for the month of October are due, while the US ISM Non-Manufacturing will be the salient event across the pond seconded by trade balance figures.
What to look for around EUR
The pair has come under some selling pressure as of late on the back of the renewed buying interest in the buck. In the meantime, a breakout of October’s high near 1.1180 remains elusive and this could be a source of potential consolidation in the near term and the later resumption of the downtrend. Despite last month’s up move in spot has been exclusively sponsored by weakness in the Dollar, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. 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 gaining 0.05% at 1.1133 and faces the next up barrier at 1.1179 (monthly high Oct.21) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1193 (200-day SMA). On the downside, a breakdown of 1.1072 (low Oct.25) would target 1.1045 (55-day SMA) en route to 1.0925 (low Sep.3).
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