• EUR/USD navigates the lower end of the range near 1.1050.
  • German trade surplus widened to €19.2 billion in September.
  • US advanced Consumer Sentiment next on tap.

EUR/USD alternates gains with losses in the lower bound of the recent range around 1.1050/40 at the end of the week.

EUR/USD flirts with the 55-day SMA

The pair remains under pressure in the area of 3-week lows around 1.1050/40, where is also located the key support at the 55-day SMA. A breakdown of this area on a convincing fashion should reassert the downside bias and therefore allow for extra losses to, initially, the key support at 1.10 the figure.

In the meantime, developments from the US-China trade space continues to dominate the mood in the global markets and supporting the leg higher in yields and the softer tone among the safe havens.

In the docket, the German trade surplus widened more than expected to €19.2 billion during September, with exports and imports also expanding above initial estimates and reversing the previous downbeat readings.

Across the pond, the flash gauge of the Consumer Sentiment tracked by the U-Mich index will be the salient event later in the day.

What to look for around EUR

The selling mood in spot has been gathering traction since the beginning of the week on the back of the renewed buying interest in the greenback and the broad-based improvement in the risk-complex, all stemming from the US-China trade scenario. 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 losing 0.02% at 1.1048 and a breakdown of 1.1036 (monthly low Nov.7) would target 1.1000 (psychological handle) en route to 1.0925 (low Sep.3). On the upside, the next up barrier emerges at 1.1114 (100-day SMA) followed by 1.1179 (monthly high Oct.21) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally).

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