- EUR/USD comes under downside pressure in the low-1.10s.
- The dollar remains bid and trades in daily highs.
- Chief Powell will speak at an event later in the evening.
The greenback keeps pushing higher at the beginning of the week and is now forcing EUR/USD to put the key support at 1.10 the figure to the test.
EUR/USD offered near 1.10
The pair has reversed the initial test of session tops in the 1.1030/35 band in tandem with the recovery in the greenback, which is flirting with 2-week peaks when tracked by the US Dollar Index.
The euro has derived extra downside pressure after November’s IFO results disappointed market participants in spite of the small bounce, at the same time confirming the view that the German economy remains well into the contraction territory and climate/sentiment gauges stay depressed.
Across the pond, the Chicago Fed index deteriorated further to -0.71 during October. Later in the session, Fed’s J.Powell will speak at an event in Rhode Island, although he is unlikely to mention monetary policy.
What to look for around EUR
Spot has been rejected from the vicinity of the 1.1100 barrier once again last week, sparking the subsequent knee-jerk to the vicinity of the critical support at 1.10 the figure. As always, EUR is expected to keep tracking trade headlines and USD-dynamics for the time being. On the more macro view, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the cautious view on the European currency in the medium term. In this regard, latest estimates from manufacturing PMIs in the euro region hint at the likeliness that the sector appears to have bottomed out, although the contagion to the services sector looks more evident as it gained extra pace.
EUR/USD levels to watch
At the moment, the pair is losing 0.02% at 1.1015 and a break below 1.0989 (monthly low Nov.14) would target 1.0925 (low Sep.3) en route to 1.0879 (2019 low Oct.1). On the flip side, the next hurdle emerges at 1.1083 (100-day SMA) followed by 1.1097 (monthly high Nov.21) and finally 1.1171 (200-day SMA).
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