EUR/USD rebounds to 1.1170 post-ISM, looks to Fedspeak

  • EUR/USD has quickly reversed the move to 1.1130.
  • US Non-farm Payrolls came in at 128K in October.
  • US ISM manufacturing missed consensus at 48.3.

The single currency is finishing the week on a positive footing, lifting EUR/USD to the 1.1170 region on the back of mixed US data releases.

EUR/USD still capped by 1.1180

The pair remains on its way to close the week in the positive territory, offsetting last week’s drop although still capped by the monthly tops in the boundaries of 1.1180 (October 21).

Volatile session for EUR/USD, as it dropped to 2-day lows around 1.1130 on the back of auspicious US Payrolls just to reverse the move soon after the ISM manufacturing missed consensus once again at 48.3 (albeit rebounding from September’s 47.8).

In the meantime, the inability of the pair to clear the area of monthly peaks near 1.1180 – ideally in the very near term - carries the potential to trigger some consolidation and may encourage sellers to return to the market. Against this potential scenario, a breach of the support area around 1.1070 should pave the way for a visit to the key 55-day SMA at 1.1043. Below this area, the upside pressure is expected to lose momentum.

What to look for around EUR

EUR has managed to return to the upper bound of the monthly range, always on the back of unabated selling pressure in the buck. Despite the October rally in spot has been exclusively sponsored by weakness in the Dollar, 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 on EUR in the short/medium term horizon.

EUR/USD levels to watch

At the moment, the pair is gaining 0.09% at 1.1160 and faces the next up barrier at 1.1179 (monthly high Oct.21) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1196 (200-day SMA). On the downside, a breakdown of 1.1072 (low Oct.25) would target 1.1043 (55-day SMA) en route to 1.0925 (low Sep.3).

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