EUR/USD corrective up move run out of steam near 1.0950
- EUR/USD rebounds to the mid-1.0900s.
- DXY recedes to lows and approaches 99.00.
- US Durable Goods Orders expanded 0.2% MoM.
EUR/USD keeps the bid tone alive so far on Friday, although the rebound lost momentum near 1.0950.
EUR/USD stronger on USD-selling, ECB
After bottoming out in levels just above the key 1.09 the figure, the pair sparked a corrective upside which has managed to test previous lows in the 1.0920 region and advance to the mid-1.0900s, where it run out of steam.
The bounce off lows in EUR picked up pace after US data came in mixed and removed tailwinds from the buck’s rally. In fact, Durable Goods Orders and Core Orders expanded more than expected 0.2% MoM, and 0.5% MoM, respectively during August. Further US data saw Personal Income falling in line with forecasts (0.4% MoM) and Personal Spending expanding 0.1% MoM, missing estimates.
Furthermore, inflation gauged by the Core PCE rose 0.1% inter-month (vs. 0.2% exp.) and 1.8% YoY (unch.).
Extra buying pressure came in after ECB’s P.Lane kind of talked down the recent decision to cut the deposit rate by the ECB after deeming it a ‘recalibration’ (?). Lane’s comments somewhat contradict his recent appreciations after he stressed on Thursday that there is still room if the central bank decides to cut rates further, while ruling out a recession in the region, considering the current slowdown as a ‘temporary weakness’ (really?).
What to look for around EUR
EUR dropped to new 2-year lows in levels just above 1.09 the figure earlier today, as investors’ sentiment remains sour and without any hint of getting any better in the near term at least. Following Monday’s results from PMIs, the economic outlook in the region deteriorated further, with the added possibility that Germany could enter into a technical recession in the third quarter. The unremitting slowdown in the bloc also justifies the ‘looser for longer’ monetary stance by the ECB, collaborating further with the bearish view surrounding the currency. Additionally, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit and UK politics adds to the gloomy scenario.
EUR/USD levels to watch
At the moment, the pair is gaining 0.13% at 1.0934 and faces the next up barrier at 1.1009 (21-day SMA) followed by 1.1109 (monthly high Sep.13) and finally 1.1163 (high Aug.26). On the downside, a break below 1.0904 (2019 low Sep.3) would target 1.0839 (monthly low May 11 2017) en route to 1.0569 (monthly low Apr.10 2017).