EUR/USD alternates gains with losses near 1.1120, looks to Brexit
- EUR/USD navigates the area of weekly lows around 1.1120.
- The Greenback stays sidelined in the upper end of the range.
- Investors’ attention remains on developments from Brexit.
The shared currency has managed to rebound from earlier lows vs. the buck and is now taking EUR/USD back to the 1.1120 region.
EUR/USD focused on Brexit, UK politics
The weekly correction in the pair seems to have met some decent contention in the 1.1120/15 band so far amidst increasing concerns on the Brexit front as well as uncertainty in the UK political arena and the renewed buying interest in the Greenback.
In fact, and in the wake of the recent events on the Brexit front, all the attention has now shifted to the EU officials and their view on the potential extension of the October 31st deadline. In addition, speculations on a probable call for snap elections and the resurgence of ‘no deal’ jitters keep weighing on sentiment.
Still an empty docket in both the Euroland and the US today ahead of Thursday’s ECB event and the release of flash PMIs for the current month.
What to look for around EUR
The upside momentum in the pair has extended to the 1.1180 region earlier this week, where it met some strong resistance and sparked a correction lower to the area below the key 100-day SMA. In the meantime, the Brexit process and developments from the US-China trade front remain the exclusive drivers of the mood surrounding spot. It is worth recalling, however, that the recent positive 3-week streak in spot has been exclusively sponsored by the renewed offered bias in the Dollar and that the outlook in Euroland continues to deteriorate and does nothing but justify the ‘looser for longer’ monetary stance by the ECB and the bearish view on the single currency in the longer run. 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 0.01% at 1.1124 and a break below 1.1047 (55-day SMA) would target 1.1013 (21-day SMA) en route to 1.0925 (low Sep.3). On the upside, the next hurdle is located at 1.1171 (monthly high Oct.18) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1204 (200-day SMA).