EUR/USD trims losses and moves near 1.1760 ahead of Powell

• EUR/USD stays depressed near the 1.1760 region on Tuesday.
• EMU’s advanced Consumer Confidence gauge coming up next.
• Markets’ attention remains on the testimony by Fed’s J.Powell.

EUR/USD remains on the defensive in the mid-1.1700s ahead of key data in the region and Powell’s testimony.

EUR/USD looks to Powell, USD

EUR/USD has managed to regain some composure following new multi-week lows in the 1.1720 region recorded earlier in the session, always on the back of the moderate recovery in the greenback.

At his speech on Tuesday, ECB’s F.Panetta reiterated the central bank needs to closely watch the level of the exchange rate, adding that the results from the ECB stimulus plan are still not satisfactory while inflation is seen running well below the bank’s target.

Later in the session, the European Commission (EC) will publish its preliminary gauge of the September Consumer Confidence followed by the speech of ECB’s P.Lane.

In the US calendar, Existing Home Sales for the month of August are due seconded by the Richmond Fed index and the key testimony by Chief J.Powell before the House Financial Services Committee on the Federal Reserve’s response to the pandemic.

What to look for around EUR

EUR/USD dropped and recorded fresh monthly lows near 1.1720 earlier in the session, resuming the post-FOMC downtrend. Despite the move, the pair’s outlook remains positive and bouts of weakness are so far deemed as short-lived and look contained. Further out, the underlying constructive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis), the so far calm US-China trade front and the steady – albeit vigilant- stance from the ECB. The solid position of the EMU’s current account and the positive performance of the speculative community are also lending support to the shared currency.

EUR/USD levels to watch

At the moment, the pair is losing 0.12% at 1.1756 and faces the next support at 1.1720 (monthly low Sep.22) seconded by 1.1709 (38.2% Fibo of the 2017-2018 rally) and finally 1.1695 (monthly low Aug.3). On the other hand, a break above 1.1917 (high Sep.10) would target 1.1965 (monthly high Aug.18) en route to 1.2011 (2020 high Sep.1).