EUR/USD bounces off lows near 1.1150 on PMIs

  • EUR/USD loses the grip and tests 1.1150.
  • German final manufacturing PMI came in at 42.1.
  • ECB’s C.Lagarde speaks in Berlin later in the day.

The single currency has managed to reverse some initial pessimism, helping EUR/USD to rebound from earlier lows in the 1.1150 region to the current 1.1160/65 band.

EUR/USD weak on data, looks to Lagarde

The pair is going through some profit taking on Monday following five consecutive sessions with gains, including another failed attempt to break above the 1.1180 region. The downside pressure today is also reinforced by the proximity of overbought levels, as gauged by the daily RSI.

The daily rebound from lows came after final October’s manufacturing PMI in Germany came in at 42.1 and 45.9 for the broader Euroland, a tad above the preliminary readings although showing that any recovery from the beleaguered manufacturing sector in the region remains absent for the time being.

Moving forward, the Sentix index is due later while investors are expected to shift their attention to the first speech by ECB’s President C.Lagarde in Berlin later today.

Across the pond, September’s Factory Orders and Durable Goods Orders will be the main publications in the US docket.

What to look for around EUR

The pair has managed to return to the upper bound of the recent range, always on the back of the persistent selling pressure in the buck. Against this backdrop, however, a breakout of October’s high near 1.1180 remains elusive for the time being. Despite last month’s up move in spot has been exclusively sponsored by weakness in the Dollar, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. In addition, the possibility that the German economy could slip into recession in Q3 remains a palpable risk for the outlook and is expected to weigh on EUR in the short/medium term horizon.

EUR/USD levels to watch

At the moment, the pair is losing 0.01% at 1.1164 and a breakdown of 1.1122 (100-day SMA) would target 1.1072 (low Oct.25) en route to 1.1045 (55-day SMA). On the flip side, the next resistance lines up at 1.1179 (monthly high Oct.21) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1195 (200-day SMA).

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