EUR/USD looks sidelined above 1.1000, eyes on trade

  • EUR/USD keeps the trade above the 1.10 handle so far.
  • US-China trade talks expected to dominate the headlines today.
  • US flash Consumer Sentiment gauge, Fedspeak next on the calendar.

The optimism around the single currency stays well and sound at the end of the week, with EUR/USD easing from recent tops although managing to keep business above the recently broke 1.10 barrier.

EUR/USD keeps the attention on trade developments

The pair is advancing for the third session in a row on Friday, giving away part of Thursday’s gains to 3-week highs near 1.1040 although still well bid above the critical 1.10 the figure.

The unremitting weakness around the Greenback plus rising European yields have been sustaining the sharp rebound in spot from last week’s 2019 lows in the 1.0880 region, all against the backdrop of the constructive tone surrounding the US-China trade talks in Washington.

Data wise today, German final inflation figures showed the CPI rose 1.2% on a year to September and came in flat on a monthly basis. Later in the day, ECB’s De Guindos is expected to speak in Madrid. Across the pond, the most relevant event will be the preliminary estimate of the US Consumer Sentiment by the U-Mich index.

What to look for around EUR

The pair has finally surpassed the critical juncture at the 1.10 handle amidst the continuation of the down move in the Greenback. However, the ongoing upside is seen as corrective only and exclusively driven by USD-dynamics. Furthermore, the rally is expected to meet strong resistance in the mid-1.10s, where is located the 55-day SMA. 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 for the next months. On another front, potential US tariffs on imports of EU cars remain well on the table, while the Brexit limbo and UK politics also adds to the current negative view.

EUR/USD levels to watch

At the moment, the pair is advancing 0.09% at 1.1014 and faces the next resistance at 1.1033 (monthly high Oct.10) seconded by 1.1053 (55-day SMA) and finally 1.1109 (monthly high Sep.13). On the downside, a breakdown of 1.0964 (10-day SMA) would target 1.0879 (2019 low Oct.1) en route to 1.0839 (monthly low May 11 2017).

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