EUR/USD rebounds from lows near the 1.1100 handle
- EUR/USD met support near 1.1100 the figure.
- German Bund yields drop to weekly lows near -0.42%.
- Brexit concerns remain as UK PM pushed for elections.
The Greenback is now giving away part of its initial gains and is helping EUR/USD to bounce off weekly lows in the proximity of the 1.1100 mark.
EUR/USD stays focused on Brexit, UK
After receding to 4-day lows near the 1.1100 neighbourhood, the pair has managed to regain some attention and is now moving to the 1.1120/30 band, closer to daily highs.
Volatility in spot stays well and sound in response to headlines from the Brexit front and UK politics, particularly after PM B.Johnson advocated for early elections in case EU officials vote in favour of extending the October deadline to January 31st 2020.
In the meantime, markets’ attention is likely to gyrate to the imminent ECB event – Draghi’s last meeting – and the release of advanced PMIs in France, Germany and the broader euro bloc, all due tomorrow.
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 0.02% at 1.1122 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).