EUR/USD: Upside stays limited around 1.1770 ahead of ISM

EUR/USD leaves behind Wednesday’s negative performance and advances to the 1.1770 region, or multi-day highs, where meets quite a tough barrier. EUR/U  |  01/10/2020 14:27
  • EUR/USD loses upside traction near 1.1770.
  • PMIs in the euro area suggest a firm recovery.
  • US ISM Manufacturing takes centre stage in the NA session.

EUR/USD leaves behind Wednesday’s negative performance and advances to the 1.1770 region, or multi-day highs, where meets quite a tough barrier.

EUR/USD now looks to US data

EUR/USD regains ground lost following Wednesday’s pullback to the sub-1.1700 region. The daily recovery, however, appears so far capped around the 1.1770 zone, where coincides the 55-day SMA.

The improved sentiment in the riskier assets lend extra wings to the pair and sustains the weekly advance amidst renewed market chatter regarding the likelihood that US policymakers could pass another stimulus bill in the short-term horizon.

The continuation of the uptrend in manufacturing PMIs in the euro bloc also underpins the momentum in the euro after Thursday’s final prints for the month of September. Data across the pond showed Initial Claims increased by 837K during last week, bettering consensus albeit marginally. Extra data showed the core PCE rose 0.3% MoM in August and 1.6% over the last twelve months. In addition, Personal Income contracted more than expected by 2.7% while Personal Spending surprised to the upside after expanding 1.0% inter-month.

Later in the session comes the key manufacturing gauge tracked by the ISM.

EUR/USD levels to watch

EUR/USD appears to have met a strong hurdle in the 1.1770 region so far, area coincident with the 55-day SMA. The pair’s outlook still remains constructive and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far calm US-China trade front and the steady – albeit vigilant- stance from the ECB. The solid position of the EMU’s current account coupled with the favourable positioning of the speculative community also lends support to the shared currency.

EUR/USD levels to watch

At the moment, the pair is advancing 0.16% at 1.1737 and a breakout of 1.1769 (weekly high Oct.1) would target 1.1772 (55-day SMA) en route to 1.1917 (high Sep.10). On the other hand, the next support aligns at 1.1612 (monthly low Sep.25) seconded by 1.1495 (monthly high Mar.9) and finally 1.1447 (50% Fibo of the 2017-2018 rally).

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