EUR/USD eases from tops, turns negative near 1.1130
- EUR/USD challenges daily lows in the 1.1130 region.
- The Greenback regains some ground near 97.40.
- US PCE matched expectation in September.
A mild rebound in the Greenback is forcing EUR/USD to recede from earlier tops and return to the 1.1130 zone, or session lows.
EUR/USD focused on trade, US data
The pair came under renewed downside pressure after climbing as high as the 1.1170/75 band following the resurgence of trade concerns after Chinese officials talked down the possibility of a deal in the longer run earlier in the day.
Those comments sparked a wave of risk-off mood, lending support to the safe havens and pushing US yields to fresh lows in the 1.70% neighbourhood.
In the docket, EUR remained unfazed after advanced October’s inflation figures and Q3 GDP prints in Euroland. In the US calendar, Challenger Job Cuts rose to 50.275K during October and Initial Claims rose at a weekly 218K, a tad above consensus.
Additional data saw inflation tracked by the Core PCE coming in flat inter-month in September and rising 1.7% over the last twelve months, while Personal Income and Personal Spending expanded at a monthly 0.3% and 0.2%, respectively, matching estimates.
In the meantime, markets are expected to enter into the usual pre-Payrolls lull, where consensus among investors see the economy to have added just 89K jobs in October and the jobless rate to have ticked higher to 3.6%.
What to look for around EUR
EUR has managed to return to the upper bound of the monthly range, always on the back of unabated selling pressure in the buck. Despite the October rally in spot has been exclusively sponsored by weakness in the Dollar, the outlook in Euroland remains fragile and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the medium term at least. 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 0.15% at 1.1133 and a breakdown of 1.1072 (low Oct.25) would target 1.1042 (55-day SMA) en route to 1.0925 (low Sep.3). On the flip side, the next up barrier emerges at 1.1179 (monthly high Oct.21) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1197 (200-day SMA).