EUR/USD regains 1.10 and above, prints daily highs
- EUR/USD pushes higher and retakes 1.10.
- German Business Climate improved slightly this month.
- US Consumer Sentiment next of relevance in the calendar.
The recovery in the shared currency is now gathering some traction and is lifting EUR/USD back above the critical barrier at 1.10 the figure.
EUR/USD firmer post-data, USD-weakness
Spot is now trading on a positive fashion, leaving behind two consecutive daily pullbacks and reversing part of the pessimism seen at the beginning of the week in the wake of awful results from flash PMIs in core Euroland.
Today, the mood around EUR has improved somewhat after the German Business Climate gauged by the IFO survey came in a tad above expectations for the current month.
On the USD-side, US declining yields vs. a steady performance in their European peers is shrinking the yield spread differential, favouring the corrective upside in the pair.
In the docket, and other than the German IFO, US house prices measured by the S&P/Case-Shiller Index expanded at a non-seasonally-adjusted 2.0% on a year to July, missing forecasts. Later in the NA session, the Conference Board will publish its key gauge of the Consumer Confidence.
What to look for around EUR
EUR is facing extra downside pressure at the beginning of the week and threatens to extend the move to 2019 lows in the 1.0920 region, as any recovery in the German economy appears to take longer than expected in light of the recent flash PMIs. The unremitting slowdown in the region justifies the looser for longer monetary conditions by the ECB and adds to the probability that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.
EUR/USD levels to watch
At the moment, the pair is gaining 0.13% at 1.1006 and faces the next resistance at 1.1029 (21-day SMA) followed by 1.1109 (monthly high Sep.13) and finally 1.1163 (high Aug.26). On the downside, a breakdown of 1.0966 (low Sep.23) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017).