EUR/USD keeps the bearish note near 1.1100

  • EUR/USD stays close to the 1.1100 neighbourhood.
  • The Greenback remains bid above the 98.00 handle.
  • EMU Trade Balance figures only scheduled today.

The selling pressure around the single currency stays unabated so far this week and has dragged EUR/USD to levels below the key support at 1.1100 the figure late on Thursday and today during the Asian trading hours.

EUR/USD offered on USD-buying, ECB

Spot has gathered extra downside traction on Thursday after ECB’s board member O.Rehn said that the upcoming package of stimulus measures could overshoot market expectations. It is worth recalling that the ECB will most likely deliver its new measures at the September meeting.

In addition, the pair suffered further the improved demand for the Greenback in light of somewhat diminishing jitters on the US-China trade front, which has in turn mitigated the sentiment around the ‘flight-to-safety’.

In today’s docket, Trade Balance figures in the euro area for the month of June are only due, whereas the flash print of US Consumer Sentiment will grab all the attention across the Atlantic.

What to look for around EUR

EUR has finally succumbed to the downside pressure and is testing the 1.1100 area and below on the back of shrinking ‘repatriation’ forces and renewed buying interest surrounding the buck. That said, sustained bullish attempts in the pair still look flimsy amidst ECB’s preparations for a fresh wave of monetary stimulus (most likely to be announced in September), including a potential reduction of interest rates, the re-start of the QE programme and a probable tiered deposit rate system. This scenario has been confirmed further this week following poor results from the euro-docket, adding to the unremitting deterioration of the economic outlook in the region. On another front, Italian politics has resurfaced as a source of uncertainty as of late and is expected to weigh on the sentiment sooner rather than later.

EUR/USD levels to watch

At the moment, the pair is losing 0.08% at 1.1098 and faces the next support at 1.1091 (low Aug.15) seconded by 1.1026 (2019 low Aug.1) and finally 1.0839 (monthly low May 11 2017). On the upside, a break above 1.1155 (21-day SMA) would target 1.1230 (55-day SMA) en route to 1.1282 (high Jul.19).

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