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EUR/USD is already trading some 60 pips off the lows. The world’s most popular currency pair enjoys a trade balance surplus which makes it naturally bid. But that’s not the only reason.

There is growing speculation that the next Chair of the Federal Reserve will be Jerome Powell. Powell is one of the few governors on the Fed’s board, something that makes him a permanent voter. However, he hardly speaks on monetary policy and has never dissented.

By voting with Yellen and Bernanke, Powell is seen as a dove: someone that will keep interest rates lower for longer. This is in contrast to the other remaining candidate, John Taylor. The Stanford University Professor is a known hawk and would like to tie monetary policy to his eponymous “Taylor Rule”.

When Taylor’s odds of becoming Fed Chair were on the rise, the dollar rallied. With more and more media reports putting Powell as the front-runner, the greenback is in retreat.

EUR influenced by Germany and Spain

And what about the euro side? Data has been mixed. German retail sales rose by 0.5% as expected while early indications from the various German states point to lower inflation.

Spain has seen inflation dropping to 1.6% y/y, worse than expected. GDP did come out as predicted, at 0.8%. The Spanish data does not seem to support the rises, but the other Spanish issue could see a positive twist.

On Friday, the Catalan parliament declared independence only to see its autonomy suspended by the central government. This was the culmination of a long crisis that gripped the headlines but failed to really move the euro. It certainly hit Spanish stocks.

Yet after the big drama on Friday, the weekend was quite calm. Madrid intends to charge the Catalan government with the heavy charge of “rebellion” but does not want to arrest the Catalan President Carles Puigdemont. Avoiding the creation of martyrs is a step in the right direction.

In any case, EUR/USD is trading around 1.1635, up from the lows of 1.1575 it experienced on Friday. Further resistance awaits at 1.1670, followed by 1.1720.

Support is at 1.1570 and then 1.15.

More:  Is EUR/USD set to fall towards 1.15?