- EUR/USD clinched new YTD lows around 1.0880, rebounds afterwards.
- Sellers remain in control and look for a move to 1.0840.
- EMU flash CPI coming up next on the docket.
The selling bias around the European currency remains everything but abated ion the first half of the week, with EUR/USD testing fresh 2019 lows in the 1.0880 region.
EUR/USD offered ahead of CPI
Spot is down for the second session in a row on Tuesday, keeping the bearish stance intact particularly after the recent break below the key support at 1.09 the figure.
It is worth recalling that the pair accelerated the downside on Monday after German flash inflation figures for the month of September came in short of expectations, showing further evidence of the loss of upside traction of consumer prices in the economy.
Later in the day, final September manufacturing PMIs are due in Euroland, although the attention will be on the advanced CPI for the region during the same period. Across the pond, the always-relevant ISM manufacturing will be in centre stage along with Fedspeak.
What to look for around EUR
EUR dropped to new 2-year lows vs. the Greenback in the 1.0880/75 band earlier in the session, as investors’ sentiment remains sour and without any hint of getting any better, at least in the near/medium term. In fact, the slowdown in the euro area stays far from abated and carries the potential to deteriorate further, as per the latest PMIs in core Euroland and despite the lacklustre improvement in a couple of German sentiment gauges. Speaking of Germany, the likeliness that the country could slip back into recession in the third quarter just adds to the already gloomy panorama for the bloc and weighs further on the single currency. The unremitting slowdown in the region does nothing but justify the ‘looser for longer’ monetary stance by the ECB. On another front, potential US tariffs on imports of EU cars remain well on the table, while the Brexit limbo and UK politics adds to the ongoing concerns.
EUR/USD levels to watch
At the moment, the pair is retreating 0.06% at 1.0890 and a breach of 1.0879 (2019 low Oct.1) would target 1.0839 (monthly low May 11 2017) en route to 1.0569 (monthly low Apr.10 2017). On the upside, the next hurdle aligns at 1.1003 (21-day SMA) followed by 1.1109 (monthly high Sep.13) and finally 1.1163 (high Aug.26).
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