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  • Eurozone final CPI arrives at 2.0% in August vs. 2.0 expected.
  • The US dollar retreat, Italy’s budget optimism aids the EUR/USD recovery.
  • Will it sustain the renewed uptick amid looming US tariffs announcement?

The recovery in the EUR/USD pair from near 1.1620 region appears to have lost steam just below the 100-DMA barrier at 1.1666, now consolidating the latest upmove near the midpoint of the 1.16 handle.

EUR futures: recovery seen picking up pace

The spot reversed almost a quarter of Friday’s decline and entered a phase of consolidation over the last hour, as the USD buyers appear to have returned, bringing a halt to the US dollar retreat across the board.

The sentiment around the greenback remains buoyed amid re-emergence of trade tensions between the US and China, as the US President Trump is set to announce an additional tariff on $ 200 billion of Chinese goods while China’s Foreign Minister pledged to retaliate should the US implement fresh trade tariffs later on Monday.

Meanwhile, the common-currency was also left unimpressed by the in-line with expectations Eurozone final CPI release that confirmed the flash readout of 2.0% y/y in August.

The immediate focus now remains on the Bundesbank monthly economic report while the EUR markets cheer the report of more positive Italian budget deficit limit. Also, markets digest the latest comments by the ECB policymaker Benoit Coeure, citing that there might be a case to extend forward guidance beyond the timing of lift off.

EUR/USD Technical Levels

According to Slobodan Drvenica at Windsor Brokers, “Converged 10/20/55SMA contained dip, offering initial support at 1.1614, ahead of pivotal support at 1.1600 (Fibo 61.8%), loss of which would confirm reversal and possibly lead towards full retracement of 1.1526/1.1721 upleg. Bearish momentum is building and supporting near-term action, along with south-heading slow stochastic, after false break above falling 100SMA (currently at 1.1672. Thick hourly cloud stands above (spanned between 1.1639 and 1.1673), marking a strong barrier which should limit upside attempts. Res:  1.1640; 1.1673; 1.1701; 1.1721. Sup:  1.1614; 1.1600; 1.1572; 1.1526.”

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