EUR/USD clings to gains around 1.1020

After a brief test of daily highs around 1.1030, EUR/USD has now re-shifted its focus to the lower end of the range in the 1.1020 zone.

EUR/USD focused on trade, data

The pair has attempted a recovery to the 1.1030 region earlier in the session, although the bullish move lacked of follow through.

In the meantime, investors remain focused on any headline regarding the US-China ‘Phase One’ deal, particularly after Friday’s comments by President Trump saying there is still no decision on any roll over of existing tariffs.

The down move in spot has been lately fuelled by the moderate recovery in the buck against the backdrop of raising US yields, always following trade news and the persistent sell off in the safe havens.

In the data space, the German Wholesale Price Index contracted at a monthly 0.1% in October and dropped 2.3% from a year earlier. Tomorrow, the key ZEW survey in Germany and the broader euro area will be in the limelight ahead of Thursday’s advanced Q3 GDP figures.

What to look for around EUR

The selling mood in the euro dragged spot to fresh 3-week lows in the 1.1020/15 band, where it is now looking to stabilize. As usual, the firm note in the greenback and developments from the US-China trade scenario are expected to dictate the mood around the pair for the time being. 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 gaining 0.05% at 1.1022 and faces the next hurdle at 1.1109 (100-day SMA) followed by 1.1179 (monthly high Oct.21) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally). On the downside, a break below 1.1016 (monthly low Nov.11) would target 1.1000 (psychological handle) en route to 1.0925 (low Sep.3).