EUR/USD stays weak, near 1.0930 ahead of US ISM

The sentiment surrounding the shared currency remains depressed so far this week, with EUR/USD navigating the area of yearly lows in the 1.0930/25 band.

EUR/USD offered on USD-buying, ECB easing

There is no change in the generalized bearish view on the pair, always amidst the reinvigorated upside momentum in the buck and declining yields of the German 10-year reference. Regarding the latter, yields dropped to fresh all-time low beyond -0.74% earlier in the session, managing to pick up some upside traction afterwards.

In addition, investors remain on the defensive ahead of the upcoming ECB meeting and the likeliness that the central bank could announce a package of extra stimulus. According to recent comments from ECB’s O.Rehn, such package could ‘overshoot’ expectations.

In the docket, Producer Prices in Euroland rose at a monthly 0.2% during July and 0.2% over the last twelve months. Across the Atlantic, the ISM Manufacturing will be the salient event, while Fed’s E.Rosengren (voter, centrist) is due to speak as well.

What to look for around EUR

Spot remains on the defensive amidst the better tone in the buck and somewhat renewed optimism on the US-China trade front, which have added to the rebound in US yields. Recent poor prints from the domestic docket have added extra downside pressure to the single currency and strengthened further the need for ECB stimulus, which is likely to be delivered at the bank’s meeting later this month. This view is also expected to keep occasional bullish attempts well contained for the time being. On the political front, Italian effervescence looks dissipated for the time being, while concerns keep growing around Brexit and the political scenario across the Channel.

EUR/USD levels to watch

At the moment, the pair is losing 0.28% at 1.0936 and a breakdown of 1.0925 (2019 low Sep.3) would target 1.0839 (monthly low May 11 2017) en route to 1.0569 (monthly low Apr.10 2017). On the upside, the next hurdle lines up at 1.1052 (10-day SMA) followed by 1.1104 (21-day SMA) and finally 1.1163 (high Aug.26).