EUR/USD, rejected at 1.1625, approaches one-week lows at 1.1590

• The euro pulls back from 1.1625, returns to 1.1600.
• Upbeat US figures trigger a dollar rebound.
• EUR/USD expected to dive below 1.1600 after ECB's meeting – Scotiabank.

The euro’s upside attempt seen during the European trading session has been short-lived. The pair failed at 1.1625 to give away gains following the release of US home sales and manufacturing data, returning to levels right below 1.160 and nearing the 1.1590 support area.

The US dollar appreciates after upbeat macroeconomic data

A slew of better than expected figures in the US has strengthened a hitherto softer dollar, dashing the tame euro recovery attempt supported by positive market sentiment and the pause on US T-Bonds rally.

US new home sales have surged 14% in September to a six-month high rate of 800,000 units, beating market expectations of 760,000 units. The median price, however, accelerated 18,7% year on year and remains at levels beyond $400,000, which is hampering the possibilities of first-time buyers.

Furthermore, the Richmond Fed Manufacturing Index improved to 12, from -3 in the previous month, well above the 3 reading forecasted by the analysts. All components of the index, shipments, new orders, and employment have improved this month, which has eased concerns about the impact of supply disruptions.

The US dollar has bounced up on the back of these releases, although the major currency crosses remain contained within previous ranges, with all eyes on the monetary policy decisions and US GDP figures, due later this week.

EUR/USD: Dovish ECB decision to push the pair returning 1.1600 – Scotiabank

The FX Analysis team at Scotiabank, sees the pair closing this week below 1.1600, weighed by a dovish ECB: “Even a moderately less dovish statement will stand starkly in contrast to next week’s Fed decision, so room for EUR gains is limited and selling the currency on a post-ECB gain is the most sensible strategy.”

Technical levels to watch