EUR/USD climbs to monthly highs beyond 1.10

  • EUR/USD moves to tops above the 1.10 handle.
  • German trade surplus shrunk to €18.1 billion in August.
  • Markets’ focus remains on US CPI, US-China trade.

Another bout of USD-selling is now lifting EUR/USD to fresh monthly highs beyond the critical barrier at 1.10 the figure.

EUR/USD higher on USD weakness

The pair is now picking up extra pace and surpassed the 1.10 handle following the persistent selling bias in the Greenback, which has forced the US Dollar Index to recede to the 98.80 region, or 3-day lows.

The squeeze higher in spot comes despite EuroGroup’s Centeno reiterated that the economic outlook on the region faces increasing risks, particularly from Brexit.

Moving forward, investors will closely follow the developments from the US-China trade talks, expected to resume later today in Washington. Speculations of a deal have been mounting in past hours, particularly after Chinese officials left the door open for some sort of a partial deal.

Data wise today, the German trade surplus shrunk more than expected to €18.1 billion during August, with Exports contracting 1.8% and Imports expanding 0.5%. Across the pond, all the attention will be on the release of inflation figures gauged by the CPI for the month of September.

What to look for around EUR

The pair has finally surpassed the critical juncture at the 1.10 handle amidst the continuation of the correction lower in the US Dollar. Looking at the broader picture, the relentless slowdown in the region does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency for the next months. On another front, potential US tariffs on imports of EU cars remain well on the table, while the Brexit limbo and UK politics also adds to the current negative view.

EUR/USD levels to watch

At the moment, the pair is advancing 0.42% at 1.1017 and faces the next resistance at 1.1055 (55-day SMA) seconded by 1.1109 (monthly high Sep.13) and finally 1.1143 (100-day SMA). On the downside, a breakdown of 1.0958 (10-day SMA) would target 1.0879 (2019 low Oct.1) en route to 1.0839 (monthly low May 11 2017).

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