EUR/USD trims losses and regains 1.1850 post-US ISM

EUR/USD bounces off multi-day lows near 1.1790.
US Initial Claims came in below the 1-million mark.
US ISM Non-Manufacturing surprised to the downside in August.

Pablo Piovano FXStreet

After bottoming out in the 1.1790/85 band during early trade, EUR/USD has managed to regain some traction and reclaim the mid-1.1800s at the time of writing.

EUR/USD now looks to US data

EUR/USD came under extra downside pressure on Thursday following an ephemeral test of levels past the 1.20 mark earlier in the week, area last visited in April 2018.

Subsequent profit taking (in light of the strong July-September rally) has forced the pair to abandon those +2-year peaks and re-focus on the downside, which is expected to meet solid contention in the 1.1700 neighbourhood.

Adding to USD-buying, recent better-than-expected results from the US docket supported the improved sentiment around the buck.

In the US calendar, the always-relevant ISM Non-Manufacturing missed expectations at 56.9 for the month of August. Earlier, weekly Claims rose by 881K during last week, exceeding initial estimates.

What to look for around EUR

EUR/USD broke above the multi-day rangebound theme last week and managed to test the area just above 1.20 the figure on Tuesday. In the meantime, the sell-off in the dollar gives extra legs to the rally that started in July, all accompanied by the improved sentiment in the risk-associated universe, auspicious results from domestic fundamentals - which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis – as well as US-China positive headlines. Also lending wings to the momentum around the euro appear the deal on the European Recovery Fund – which helped putting political fears within the bloc to rest (for now) – and the solid position of the current account in the region. In addition, the speculative community has supported the bullish stance on the euro for yet another week (as per the latest CFTC positioning report).

EUR/USD levels to watch

At the moment, the pair is losing 0.08% at 1.1845 and faces the next support at 1.1789 (weekly low Sep.3) seconded by 1.1754 (weekly low Aug.21) and finally 1.1695 (monthly low Aug.3). On the other hand, a move above 1.2011 (2020 high Sep.1) would target 1.2032 (23.6% Fibo of the 2017-2018 rally) en route to 1.2413 (monthly high Apr.17 2018).

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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