EUR/USD challenges the 55-day SMA near 1.1040

EUR/USD keeps the positive start of the week so far, managing well to keep the trade in the upper end of the daily range near 1.1040, where coincides the key 55-day SMA.

EUR/USD remains focused on trade, USD-dynamics

After five consecutive daily pullbacks, spot appears to have met decent contention in the 1.1020/15 band, or 3-week lows, recorded last Friday on the back of renewed and strong buying impetus in the buck.

Today, concerns have resurfaced around the ‘Phase One’ deal, exacerbated after President Trump’s comments last Friday, propping up the demand for the safe havens in detriment of the greenback.

Data wise in the euro region, the German Wholesale Price Index contracted at a monthly 0.1% in October and dropped 2.3% from a year earlier. Later in the week, the key ZEW survey in Germany will be in centre stage along with advanced Q3 GDP figures in the broader Euroland.

What to look for around EUR

The selling mood in the euro dragged spot to fresh 3-week lows in the 1.1020/15 band last week, where some moderate contention emerged. As usual, the performance in the greenback and developments from the US-China trade scenario are expected to dictate the mood around the pair for the time being. On the macro view, 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 further on EUR in the short/medium term horizon.

EUR/USD levels to watch

At the moment, the pair is gaining 0.16% at 1.1034 and faces the next hurdle at 1.1109 (100-day SMA) followed by 1.1179 (monthly high Oct.21) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally). On the downside, a break below 1.1016 (monthly low Nov.11) would target 1.1000 (psychological handle) en route to 1.0925 (low Sep.3).