EUR/USD flirting with the 100-day SMA around 1.1120
- EUR/USD climbs further to the 1.1120/25 band on Wednesday.
- EMU, German data next of relevance in the docket.
- The Fed is expected to cut rates by 25 bps later today.
The upside momentum in the single currency remains well and sound so far this week and is now helping EUR/USD to extend the rebound to the 1.1120 region.
EUR/USD remains bid ahead of data, FOMC
The pair is up for the third session in a row on Wednesday and continues to regain ground lost after recent lows in the 1.1070 zone recorded in past sessions.
As always, the renewed selling bias surrounding the Greenback has been supporting the rebound in spot from recent lows, although the up move appears to have met some decent resistance in the 1.1125/30 band, where sits the key 100-day SMA.
Moving forward, the German labour market report is due seconded by several confidence/sentiment gauges in the broader euro area as well as preliminary readings of German inflation for the month of October. Across the pond, the most salient event will be the FOMC meeting and the subsequent press conference by Chief J.Powell.
What to look for around EUR
EUR has so far managed to return to the area above the 1.1100 mark so far this week, re-shifting its target to monthly tops near 1.1180. 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 gaining 0.06% at 1.1118 and faces the next up barrier at 1.1124 (100-day SMA) seconded by 1.1171 (monthly high Oct.18) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally). On the downside, a breakdown of 1.1072 (low Oct.25) would target 1.1040 (55-day SMA) en route to 1.0925 (low Sep.3).