EUR/USD drops to session lows near 1.1010 ahead of ZEW

EURUSD comes under pressure near 1.1010.
German ZEW survey coming up next.
NY Empire State index, Fedspeak due later in the US docket.

Pablo Piovano FXStreet

A renewed bout of selling pressure around the European currency is now dragging EUR/USD to fresh daily lows in the vicinity of 1.1010.

EUR/USD focused on German data

The pair has quickly faded the earlier spike to the 1.1050 region and is now focusing instead on the lower end of the weekly range near the key support at 1.1000 the figure.

The knee-jerk in spot comes in response to the continuation of the correction higher in the Greenback amidst steady US yields and some fresh effervescence from the US-China trade front.

Later in the session, EUR will be under further scrutiny in light of the publication of the key German/EMU Economic Sentiment tracked by the ZEW survey. Across the pond, the regional gauge of the manufacturing sector by the Empire State index will be the salient event in tandem with speeches by FOMC’s Bostic, George and Daly.

What to look for around EUR

The pair met strong resistance in the mid-1.10s, where sits the key 55-day SMA, sparking some profit taking and the ongoing retracement to the vicinity of the 1.10 support. The corrective upside, however, remains well in place for the time being and supported by the improved mood in the riskier assets and a weak 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 in the longer run. On another front, potential US tariffs on imports of EU cars remain well on the table, while the Brexit limbo and UK politics could also maintain gains somewhat limited.

EUR/USD levels to watch

At the moment, the pair is retreating 0.02% at 1.1022 and a breakdown of 1.0985 (21-day SMA) would target 1.0879 (2019 low Oct.1) en route to 1.0839 (monthly low May 11 2017). On the flip side, the next barrier emerges at 1.1049 (55-day SMA) seconded by 1.1062 (monthly high Oct.11) and finally 1.1109 (monthly high Sep.13).

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Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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