EUR/USD looks for direction below 1.1100

  • EUR/USD trades unchanged around the 1.1090 region.
  • EMU final CPI figures next of relevance in the docket.
  • Focus remains on trade, FOMC, Jackson Hole.

The single currency is gyrating around Friday’s close vs. the Greenback, prompting EUR/USD to navigate within a tight range near the 1.1190 area.

EUR/USD looks to data, trade

The offered bias stays unchanged around the shared currency at the beginning of the week, as market participants continue to adjust to last week’s comments by ECB’s Rehn on the upcoming easing measures by the central bank (most likely to be unveiled at the September meeting).

In the meantime, President Trump has once again reiterated that US and China appears quite far from clinching a trade deal, although markets have practically ignored his comments.

Mood in the global markets is slightly biased towards the risk-on trade so far, with yields and most G-10 FX space trading in a sideline theme for the time being.

Later in the session, final July inflation figures in Euroland are expected to match the preliminary readings. Later in the week, it will be all about the FOMC minutes, the Jackson Hole Symposium and the speech by Fed’s J.Powell.

What to look for around EUR

EUR has finally succumbed to the downside pressure and is testing the area below the 1.1100 handle on the back of shrinking ‘repatriation’ forces, renewed buying interest surrounding the buck and expectations of ECB easing. 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 as of late 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 gaining 0.01% at 1.1091 and a break above 1.1148 (21-day SMA) would target 1.1227 (55-day SMA) en route to 1.1282 (high Jul.19). On the flip side, the next support emerges at 1.1066 (low Aug.16) seconded by 1.1026 (2019 low Aug.1) and finally 1.0839 (monthly low May 11 2017).

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