- EUR/USD consolidates the corrective bounce below 1.1700
- President Lagarde indicated the ECB will deploy further stimulus if needed.
- Eurozone/ US Consumer Confidence data, Fedspeak in focus.
EUR/USD is consolidating the recent corrective advance towards 1.1700, as the US dollar attempts a comeback across the board, despite the risk-on market mood.
At the time of writing, the main currency pair adds 0.10% to trade at 1.1675, having hit a daily high of 1.1684. The spot hit a two-month low of 1.1625 last Friday.
EUR/USD’s correction from two-month lows gained traction on Monday after the upbeat risk tone on the global equities curbed the US dollar’s recent ascent. The haven demand for the greenback weakened after the weekend’s solid Chinese Industrial Profits data suggested a robust economic recovery in the world’s second-biggest economy and lifted the overall market mood. The optimism extended into the US equities alongside the hopes of a US fiscal stimulus deal.
On the EUR-side of the story, the shared currency received a boost from the European Central Bank (ECB) President Christine Lagarde’s comments, as she indicated that the central bank stands ready to deploy additional stimulus, if necessary, to support the post-coronavirus pandemic economic turnaround.
Looking ahead, the upside potential in the spot appears limited, as the bearish bets in the dollar remain at almost a decade high and a likely short-squeeze could revive the bullish momentum in the greenback.
In the meantime, markets look forward to the Confidence numbers from both continents, Fedspeak and the first US Presidential debate for fresh trading impulse in the pair.
EUR/USD Technical levels
“..fresh buying will take place on a clear break above 1.1680, which in turn will target 1.1750 theoretical aim with the September 23 top, near 1.1720, likely acting as an intermediate halt. Alternatively, the pair’s downside below the 200-bar SMA level of 1.1660 may recall 1.1640 and 1.1610 immediate supports on the chart,” FXStreet’s Analyst Anil Panchal explains.