EUR/USD eases from tops, back near 1.0940

The single currency is fading the initial optimism and is now prompting EUR/USD to recede to the 1.0940 region.

EUR/USD focused on data, trade headlines

After climbing as high as the 1.0960/70 band earlier in the session, the pair mat a tough barrier and is now receding some ground to the 1.0940 region, closer to Wednesday’s low.

EUR came under renewed and strong selling pressure this week on the back of the rebound in the demand for the Greenback, particularly after the Trump impeachment issue and amidst some positive headlines from the US-China trade front.

Data wise in Euroland, German Consumer Climate tracked by GfK improved to 9.9 for the month of October. Later in the session, M3 Money Supply and the ECB Economic Bulletin are also due. In addition, President Draghi and Board member A.Enria will speak at the Fourth ESRB Annual Conference in Frankfurt.

What to look for around EUR

EUR is facing extra downside pressure this week and threatens to extend the move to 2019 lows in the 1.0920 region, as any recovery in the German economy appears to take longer than expected in light of the recent flash PMIs. The unremitting slowdown in the region justifies the looser for longer monetary conditions by the ECB and adds to the probability that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.

EUR/USD levels to watch

At the moment, the pair is up 0.02% at 1.0945 and faces the next resistance at 1.1017 (21-day SMA) followed by 1.1109 (monthly high Sep.13) and finally 1.1163 (high Aug.26). On the downside, a breach of 1.0942 (low Sep.25) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017).