EUR/USD tumbles to fresh lows near 1.1120

The selling bias around the single currency is now picking up further pace and drags EUR/USD to new 2-day lows near 1.1120.

EUR/USD flirting with the 100-day SMA

The daily pullback in spot is challenging the initial relevant support at the key 100-day SMA in the 1.1135/30 band, always on the back of a moderate pick up in the demand for the buck.

In fact, negative Brexit headlines are weighing on the risk appetite mood after Number 10 said if the Parliament votes down the government timetable bill later today, PM B.Johnson will call for snap elections at some point before Christmas.

While Brexit developments are likely to dominate the global mood in the very near term, investors remain cautious ahead of the upcoming ECB event and the release of preliminary PMIs in core Euroland.

What to look for around EUR

The upside momentum in the pair has extended to the 1.1180 region earlier this week, where it met some strong resistance for the time being. In the meantime, the Brexit process and developments from the US-China trade front remain the exclusive drivers of the mood surrounding spot. It is worth recalling, however, that the recent positive 3-week streak in spot has been exclusively sponsored by the renewed offered bias in the Dollar and that the outlook in Euroland continues to deteriorate and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the longer run. In addition, the possibility that the German economy could slip into recession in Q3 remains a palpable risk for the outlook and is expected to weigh on EUR in the short/medium term horizon.

EUR/USD levels to watch

At the moment, the pair is losing 0.18% at 1.1129 and a break below 1.1049 (55-day SMA) would target 1.1009 (21-day SMA) en route to 1.0925 (low Sep.3). On the upside, the next hurdle is located at 1.1171 (monthly high Oct.18) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1206 (200-day SMA).