Search ForexCrunch
  • EUR/USD alternates gains with losses in the mid-1.10s.
  • Upbeat mood in the riskier assets helps with momentum.
  • Cautiousness expected to grow ahead of ECB event.

The shared currency is exchanging gains with losses vs. the Greenback on Tuesday, taking EUR/USD to the 1.1040/50 area soon after the opening bell in the Old Continent.

EUR/USD looks to trade, ECB

Spot is now attempting some sort of consolidation in the mid-1.10s after failing around the 1.1080 area last week, always on the back of somewhat alleviated trade jitters and ahead of the key ECB gathering on Thursday.

The better tone in the risk-associated space lifted yields of the German Bund from recent lows, managing to retake the -0.57% region after bottoming out in all-time lows near -0.75% in past sessions.

All eyes remain on the ECB event on Thursday, when the central bank is expected to finally deliver its well-advertised stimulus package. However, much of it appears to be priced in already, lifting the bar for a dovish surprise and opening the door at the same time for some disappointment, which could drive the pair higher.

Data wise in Euroland today, French Non-farm Payrolls increased 0.2% QoQ in Q2 and Industrial Production expanded 0.3% MoM during July, coming in short of estimates. Later in the session, Italian Industrial Production is also due, whereas the NFIB index and JOLTs Job Openings are expected across the pond.

What to look for around EUR

The pair is expected to stabilize at current levels as markets get closer to the ECB gathering on Thursday. The recent up move to the upper 1.10s is still seen as corrective only, as results from the domestic docket keep the pressure intact on the single currency and support the need for ECB stimulus. This view is also expected to keep occasional bullish attempts well contained for the time being. On the political front, Italian effervescence looks dissipated for the time being, while uncertainty over UK politics and Brexit could add to the current inconclusive price action.

EUR/USD levels to watch

At the moment, the pair is gaining 0.03% at 1.1050 and faces the next barrier at 1.1084 (high Sep.5) followed by 1.1159 (55-day SMA) and finally 1.1163 (high Aug.26). On the flip side, a breach of 1.0925 (2019 low Sep.3) would target 1.0839 (monthly low May 11 2017) en route to 1.0569 (monthly low Apr.10 2017).