EUR/USD struggles for direction near 1.1070, looks to data, FOMC

After bottoming out in the 1.0990 region at the beginning of the week, EUR/USD managed to regain composure and advance to the current 1.1070 region, where it is facing some moderate resistance.

EUR/USD focused on data, Fed

Spot fully recovered on Tuesday the negative start of the day recorded on Monday, although the 1.1070/80 band still stands as quite a relevant hurdle this week. This area of resistance is reinforced by the short-term line just below 1.1100 the figure and last week’s tops near 1.1110.

Renewed USD-weakness helped the pair to fade the drop to the sub-1.10 region amidst lack of relevant headlines on both sides of the ocean, while investors appear to have fully digested the ECB event and are now focused on the upcoming FOMC meeting. It is worth reiterating that market consensus expects the Fed to cut interest rates by 25 bps against the backdrop of Powell’s ‘mid-term adjustment’.

Later today, the final CPI figures in Euroland for the month of August are due. Across the pond, the FOMC gathering will be the salient event, seconded by Housing Starts and Building Permits.

What to look for around EUR

The pair is trading without a clear direction so far this week. In fact, EUR lost some shine following the recent peaks beyond 1.11 the figure, recorded after the ECB announced €20 billion/month in bond purchases under the re-launched QE programme. The occasional recovery in spot, however, is seen as corrective only always against the backdrop of unremitting slowdown in the region, looser for longer monetary conditions by the ECB and the likelihood that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.

EUR/USD levels to watch

At the moment, the pair is losing 0.07% at 1.1064 and a break below 1.0990 (low Sep.16) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017). On the other hand, the next up  barrier aligns at 1.1109 (monthly high Sep.13) seconded by 1.1163 (high Aug.26) and finally 1.1178 (100-day SMA).