- EUR/USD remains on the defensive and tests the 1.1750 area.
- The risk aversion sentiment continues to dictate the price action.
- US JOLTs Job Openings, API’s weekly report next on the docket.
The selling bias around the shared currency remains unabated for yet another session and is dragging EUR/USD to fresh lows in the mid-1.1700s.
EUR/USD cautious ahead of ECB
EUR/USD is prolonging the downside for the seventh session in a row on Wednesday, challenging at the same time new 4-week lows in the vicinity of 1.1750, always on the back of the persistent recovery in the buck.
The generalized cautiousness among traders ahead of the ECB event on Thursday combines with the prevailing risk-off mood, all collaborating with the corrective leg lower in the pair to sub-1.1800 levels.
Consensus among market participants has placed the recent strengthening of the exchange rate, the progress of the economic recovery and the current deflationary environment on top of the agenda at Thursday’s ECB meeting, although the central bank is expected to keep its policy unchanged.
Nothing worth mentioning in the euro calendar, whereas JOLTs Job Openings and the weekly report on US crude oil stockpiles by the API are only scheduled across the pond.
What to look for around EUR
EUR/USD managed to test the area just above 1.20 the figure at the beginning of the month. However, bulls failed to extend the rally further north, sparking a leg lower to the sub-1.18 zone so far instead. In the broader picture, the bearish view on the dollar continues to sustain the underlying constructive bias in the pair, all accompanied by the improved sentiment in the risk-associated universe, auspicious results from domestic fundamentals – which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis – as well as US-China positive headlines. Also lending wings to the momentum around the euro appear the deal on the European Recovery Fund – which helped putting political fears within the bloc to rest (for now) – and the solid position of the current account in the region.
EUR/USD levels to watch
At the moment, the pair is losing 0.06% at 1.1768 and faces the next support at 1.1754 (weekly low Aug.21) 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 move above 1.2011 (2020 high Sep.1) would target 1.2032 (23.6% Fibo of the 2017-2018 rally) en route to 1.2413 (monthly high Apr.17 2018).