EUR/USD meets weekly support near 1.1730 ahead of ECB-speak

EUR/USD alternates gains with losses in the 1.1740 region and reverses the initial drop to multi-day lows near 1.1730 on Wednesday.

EUR/USD now looks to data, ECB

EUR/USD is down for the third session in a row on Wednesday and extends further the rejection from recent 2-week tops in the 1.1830 area (October 9).

The continuation of the downtrend in spot comes in response to the risk aversion scenario sustained by rising uncertainty in the US politics, stagnant progress regarding the recovery in the euro bloc and the unabated advance of the pandemic and its impact on the global economy.

Data wise in Euroland, September’s Producer Prices are next on tap. Earlier in the session, final Spanish inflation figures saw the CPI rising 0.2% MoM in September and contracting 0.4% over the last twelve months. In addition, ECB’s C.Lagarde will speak later seconded by board members Y.Mersch, P.Lane, F.Panetta and A.Enria.

Across the pond, Producer Prices for the month of September will be the sole release followed by the weekly report on crude oil inventories by the API.

What to look for around EUR

EUR/USD sheds further ground and navigates multi-day lows after failing to extend the rally further north of the 1.1830 level recorded at the end of last week. The pair’s outlook still remains constructive, however, and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far cautious stance from the ECB and the solid position of the EMU’s current account.

EUR/USD levels to watch

At the moment, the pair is gaining 0.02% at 1.1745 and a breakout of 1.1830 (monthly high Oct.9) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18). On the downside, initial support lines up at 1.1709 (38.2% Fibo of the 2017-2018 rally) seconded by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9).