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  • EUR/USD’s sell-off pauses as S&P 500 futures rise. 
  • China’s Industrial Profits rose for the fourth straight month in August. 
  • ECB’s Lagarde may play spoilsport by expressing concerns regarding the euro’s strength. 

EUR/USD is taking a breather following last week’s sharp drop. The dollar is weakening with the US stock index futures seemingly cheering the upbeat China data released over the weekend. 

Up 20 pips 

The pair fell by nearly 1.8% to 1.1615 last week to register its biggest single-week percentage decline since March. 

At press time, the pair is trading at 1.1635, having put in a low of 1.1615 in early Asia. The S&P 500 futures are up over 0.30%, and the Asian indices are flashing green, keeping the safe-haven US dollar under pressure. 

China’s industrial profits grew for a fourth-consecutive month in August due to a rebound in commodity prices and equipment manufacturing, the data published on Saturday showed. 

The currency pair may extend gains if the European stocks open the day on a positive note. However, the gains will likely be reversed if the European Central Bank (ECB) President Lagarde expresses concern regarding the euro’s strength during her speech at 13:45 GMT. 

EUR/USD advanced from 1.0636 to 1.2011 in the five months to August. The sharp appreciation has recently revived disinflation fears at the ECB. 

ECB’s Visco said Sunday that the recent strengthening of the euro is worrying because it places further downward pressure on prices, and would require the European Central Bank to intervene if that jeopardizes price stability. 

Lagarde might echo Visco’s stance, in which case, the FX desks would offer euros irrespective of the strength in the equity markets. 

Apart from equities and Lagarde’s speech, the pair may take cues from the Dallas Fed Manufacturing index scheduled for release during the North American trading hours. 

Technical levels