EUR/USD trading flat around 1.1030 ahead of Sentix

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  • EUR/USD looks for direction near 1.1030 on Monday.
  • German trade surplus widened to €20.2 billion in July.
  • September EMU Sentix index coming in later.

EUR/USD is navigating the area around Friday’s close in the 1.1030 region at the beginning of the week.

EUR/USD looks to data, ECB

The pair came under renewed selling pressure after climbing to the 1.1080 region last week, area coincident with the 21-day SMA. Poor data from the US manufacturing sector put the buck under strong selling pressure and sponsored at the same time the rebound in spot from new YTD lows in the vicinity of 1.0920 (Tuesday 3 September).

Further rangebound trading is thus expected in the very near term in light of the critical ECB event on Thursday. It is worth recalling that market participants are anticipating that the central bank could reduce the deposit rate and re-start the QE programme, while a tiered interest rate scheme is not ruled out.

Later today in the docket, EMU’s Investor Confidence tracked by the Sentix Index is due. Earlier in the day, the German trade surplus widened to €20.2 billion during July, also surpassing expectations.

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 0.05% at 1.1030 and faces the next barrier at 1.1084 (high Sep.5) followed by 1.1163 (high Aug.26) and finally 1.1165 (55-day SMA). 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).

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