EUR/USD corrects lower, back near 1.1020

  • EUR/USD’s upside meets resistance around 1.1030.
  • ECB minutes said some members opposed QE.
  • US Core CPI rose 0.1% MoM in September, below consensus.

The upside momentum in EUR/USD now appears to be taking a breather after the earlier spike to fresh monthly tops in the 1.1030/35 band.

EUR/USD in 3-week highs, looks to trade

The persistent weakness hurting the Greenback has boosted the pair to monthly highs in the 1.1030 region, where it seems to have meet a tough resistance for the time being.

EUR is also deriving support from the moderate rebound in European yields, where the German 10-year reference is now hovering around the -0.5% region. The better tone in German yields reduced their spread differential vs. the US peers to 210 pts, also collaborating with the pair’s up move.

In the docket, US inflation figures measured by the CPI came in flat inter-month during September and rose 1.7% from a year earlier. In addition, consumer prices excluding food and energy costs rose 0.1% MoM and 2.4% over the last twelve months

In the meantime, all the attention is expected to shift to the imminent start of the US-China trade talks in Washington amidst increasing expectations… as well as skepicism.

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 0.50% at 1.1026 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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