EUR/USD recedes to daily lows in the 1.1640 area

  • EUR/USD loses momentum and re-visits the 1.1650/40 area.
  • Risk aversion kicks in following the negative open in European markets.
  • Durable Goods Orders, Fed’s Williams in the limelight later in the session.

The offered bias has returned to the single currency and is now dragging EUR/USD to fresh daily lows in the 1.1650/40 band.

EUR/USD looks to risk trends, dollar

EUR/USD resumes the weekly downside and trades at shouting distance from Thursday’s 2-month lows near 1.1630, always on the back of the firm note surrounding the buck amidst the dominating risk aversion mood.

In fact, the risk-off environment keeps ruling the mood among market participants on Friday, dragging US yields lower and forcing European major stock indices to navigate well into the red territory so far.

Earlier in the session, ECB’s Villeroy stressed that a pick-up in the inflation of the region remains elusive, adding that the ECB could allow consumer prices to run above the bank’s goal for some time (when and if that moment ever comes). Still around the ECB, Board member and Governor of the Bank of Spain Hernandez de Cos noted that a digital euro is not even considered in the immediate future.

Data wise in Euroland, ECB’s M3 Money Supply expanded 9.5% on a year to August and Private Sector Loans expanded at an annualized 3.0% during the same period. In Italy, both Business Confidence and Consumer Confidence improved in September to 92.1 and 103.4, respectively.

Across the Atlantic, Durable Goods Orders for the month of August and speeches by FOMC’s John Williams will be the only events of note.

What to look for around EUR

EUR/USD recorded fresh 2-month lows near 1.1630 on Thursday. Despite the move, the pair’s outlook still remains constructive 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 calm US-China trade front and the steady – albeit vigilant- stance from the ECB. The solid position of the EMU’s current account coupled with the favourable positioning of the speculative community also lends support to the shared currency.

EUR/USD levels to watch

At the moment, the pair is retreating 0.20% at 1.1644 and faces immediate support at 1.1626 (monthly low Sep.24) seconded by 1.1495 (monthly high Mar.9) and finally 1.1447 (50% Fibo of the 2017-2018 rally). On the other hand, a break above 1.1709 (38.2% Fibo retracement of the 2017-2018 rally) would target 1.1749 (55-day SMA) en route to 1.1917 (high Sep.10).

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