EUR/USD is getting used to a lower range. While the moves are limited, the limits of the range are well-defined. The pair trades between support at 1.1575 and resistance at 1.1620. This is the lower end of the recent trading ranges.
Update: EUR/USD made a break to the downside, reaching a low of 1.1554. Yet this did not last for too long, as the pair is now recovering.
Why is the pair trading at the lower ground? Draghi’s dovish words from two weeks ago still echo quite loudly. In addition, the US dollar remains robust despite a not-so-impressive jobs report and amid other positive figures.
The most recent economic data has been mixed. German industrial output dropped by 1.6% in September, worse than a slide of 0.7% that was expected. Yet yesterday we had some positive figures: the Sentix investor confidence came out at 34 points, significantly above 31.2 that was predicted and a jump from 29.7 in the previous month.
What awaits the euro below the current levels? If the pair slips under 1.1575, it will be the lowest since July. So back then, it could find some support at 1.15, which is a round number and also served as resistance back then. Another cushion is 1.1440. Resistance awaits at 1.1670.
ECB President Mario Draghi is due to deliver opening remarks in Frankfurt at a conference about banking supervision. He is likely to skip the opportunity to discuss monetary policy, but surprises are possible as well.
In any case, here is the daily chart showing the current drag. Later today, we will hear from outgoing Fed Chair Janet Yellen and before that, from Randal Quarles, a new governor on the Fed. The US will publish the JOLTs report.
More: EUR/USD: Add Shorts On Any Rally Into 1.17-1.18 – Nordea
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