EUR/USD regains the 1.1700 level and beyond, looks to data

EUR/USD meets support in the 1.1690/85 band on Friday.
Attention remains on the EU Summit, Brexit and data.
US Retail Sales, U-Mich index take centre stage later in the NA session.

Pablo Piovano FXStreet

The single currency remains under pressure and forces EUR/USD to briefly break below the 1.1700 level and challenge weekly lows at the same time.

EUR/USD focused on data, EU Summit

EUR/USD alternates gains with losses at the end of the week amidst the broader leg lower which followed the rejection from tops in the 1.1830 region (October 9).

Further out, the renewed weakness in the pair comes in tandem with the pick-up in the risk aversion and the subsequent extra demand for the safe haven dollar. Extra inflows in the greenback come as a result of rising uncertainty in the US political scenario and rising fears that the second wave of the coronavirus pandemic could hurt the ongoing recovery in the global economy.

Adding to the weak note surrounding the single currency (and sustaining the risk-off mood), there are no progress on the Brexit front and no new developments from the EU Summit in Brussels, where the EU-UK negotiations remain the centre of the debate. On this regard, UK PM B.Johnson is expected to shed further details later in the session.

In the data sphere, final EMU CPI figures for the month of September are next on tap followed by August’s Trade Balance figures in the region. Across the pond, Retail Sales take centre stage seconded by the U-Mich index, Industrial/Manufacturing Production, Capacity Utilization and TIC Flows.

What to look for around EUR

EUR/USD navigates multi-day lows, but sellers have so far failed to drag the pair further south of the 1.1690/85 band. The outlook on EUR/USD 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 (despite momentum appears somewhat mitigated in several regions), 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 0.07% at 1.1715 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 other hand, the next support is located at 1.1688 (monthly low Ot.15) followed by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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