EUR/USD challenges 2-month lows near 1.1170
|- EUR/USD comes under further pressure and sinks to 1.1170.
- ECB could announce extra easing measures on Thursday.
- EC’s Consumer Confidence coming up next.
The offered bias remains intact around the single currency in the first half of the week, dragging EUR/USD to approach the area of 2-month lows in the 1.1170/60 band
EUR/USD looks to ECB, data
Spot is down for the third session in a row so far today, always in response to the solid demand for the greenback and rising expectations of a fresh wave of monetary easing by the ECB, likely to be announced at its meeting later this week.
In addition, diminished odds for a 50 bps interest rate cut by the Federal Reserve next week have been also lending extra legs to the rally in the buck, which has already pushed the US Dollar Index to new 5-week highs around 97.60.
In the docket, flash July Consumer Confidence in the euro area measured by the European Commission is only due later in the day, while Existing Home Sales and the Richmond Manufacturing index are due across the Atlantic.
What to look for around EUR
The inability of the pair to clear the important resistance area in 1.1280/90 has encouraged sellers to return to the markets and drag EUR back below the 1.1200 level, threatening to visit the key contention area in the 1.1181/76 band. Further out, occasional bullish attempts should be seen as a short-lived against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank as early as this week’s meeting, including interest rate cuts, the resumption of the QE programme and potential changes in the forward guidance.
EUR/USD levels to watch
At the moment, the pair is retreating 0.36% at 1.1168 and faces immediate contention at 1.1116 (monthly low May 30) seconded by 1.1109 (low Apr.26) and finally 1.1106 (2019 low May 23). On the upside, a breakout of 1.1286 (high Jul.11) would target 1.1313 (200-day SMA) en route to 1.1412 (high Jun.25).
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