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  • EUR/USD extends the drop to the 1.1720 area on Tuesday.
  • ECB-speak, EMU’s Consumer Confidence next in the calendar.
  • Markets’ attention remains on Powell’s first testimony later in the session.

The selling pressure around the single currency remains well in place on turnaround Tuesday, with EUR/USD clinching fresh multi-week lows around 1.1720.

EUR/USD looks to data, Powell

EUR/USD prolongs the leg lower for the third session in a row on Tuesday, briefly testing fresh lows in the 1.1720 region albeit managing to regain some composure soon afterwards.

The dominating risk aversion mood and the renewed and strong demand for the greenback put the pair under extra downside pressure in past sessions, opening the door at the same time to deeper retracement in the short-term.

Later in the session, ECB’s Board members F.Panetta and P.Lane are due to speak while the European Commission (EC) will publish the preliminary gauge of the Consumer Confidence in the region.

Across the pond, Chief J.Powell wil testify on the Fed’s response to the pandemic before the House Financial Services Committee. In the data space, Existing Home Sales and the Richmond Fed Index are also due.

What to look for around EUR

EUR/USD dropped and recorded fresh monthly lows near 1.1720 earlier in the session, resuming the post-FOMC downtrend. Despite the move, the pair’s outlook remains positive and bouts of weakness are so far deemed as short-lived and look contained. Further out, the underlying constructive 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 following the coronavirus crisis), 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 and the positive performance of the speculative community are also lending support to the shared currency.

EUR/USD levels to watch

At the moment, the pair is losing 0.26% at 1.1739 and faces the next support at 1.1720 (monthly low Sep.22) seconded by 1.1709 (38.2% Fibo of the 2017-2018 rally) and finally 1.1695 (monthly low Aug.3). On the other hand, a break above 1.1917 (high Sep.10) would target 1.1965 (monthly high Aug.18) en route to 1.2011 (2020 high Sep.1).