EUR / USD extends slide to 1.1720 ahead of ECB speech

  • EUR / USD remains on the defensive well below 1.1800.
  • Investors’ attention remains on US politics and the pandemic.
  • An ECB speech and eurozone industrial production data are prominent on today’s economic calendar.

The pair EUR/USD extends the drop towards the region of 1.1720, reaching new lows of several days at levels not seen since last October 5.

EUR / USD focuses attention on data and the ECB

The EUR / USD moves lower for the third day in a row on Wednesday and further extends the rejection from recent 2-week highs in the 1.1830 region (Oct 9).

The continuation of the downtrend in the pair responds to the risk aversion scenario due to growing uncertainty in US policy, the stagnation of progress in the eurozone recovery and the relentless advance of the pandemic and its impact on the global economy.

As for the eurozone data, today the producer price index for September will be released. At the beginning of the session, the final Spanish inflation figures saw the CPI rise 0.2% month-on-month in September and contracted 0.4% in the last twelve months. Further, ECB President Lagarde will speak later, followed by board members Y. Mersch, P. Lane, F. Panetta, and A. Enria.

Across the Atlantic, the producer price index for the month of September will be the only publication followed by the weekly report on API crude oil inventories.

What can we expect around the EUR?

EUR / USD is losing ground and is moving through multi-day lows after failing to extend the move beyond the 1.1830 region recorded at the end of last week. However, the pair’s outlook remains constructive and bearish moves are seen as only corrective. Furthermore, the positive bias in the euro remains underpinned by upbeat results in national fundamentals (which in turn have further supported the view of a strong economic recovery after the fall in activity during the spring), the stance so far cautious of the ECB and the solid position of the current account of the euro area.

EUR / USD levels

At the time of writing, the EUR / USD pair is shedding 0.16% on the day, trading at 1.1724. A break above 1.1830 (Oct 9 high) would target 1.1917 (Sept 10 high) en route to 1.1965 (Aug 18 high). On the downside, initial support is at 1.1709 (38.2% Fibonacci retracement of the 2017-2018 move), followed by 1.1612 (September 25 low) and finally 1.1495 (March 9 high).

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Credits: Forex Street

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