EUR/USD drops back below 1.1600 still holds daily gains
- EUR/USD consolidates modest gains but drops back below 1.1600.
- Despite recovery still looks with some vulnerability to the downside particularly while under 1.1600.
The EUR/USD pair bottomed at 1.1525 earlier today, hitting the lowest intraday level in almost three weeks but quickly bounced to the upside. It peaked at 1.1617 and near the end of the US session, it was hovering around 1.1595.
Comments from EU Brexit negotiator Michel Barnier, pushed GBP/USD to the upside and also EUR/USD. Also the euro received a boost from the EUR/CHF pair that climbed today more than a hundred pips, supported by remarks from Italian Finance Minister Giovanni Tria signaling that the budget will adhere to EU rules.
From a technical perspective, the euro was able to defend again the 1.1520/30 area that also capped last week slide. A break lower could add more pressure to the pair exposing 1.1500 and also 1.1460. The short-term bias points to the upside, but so far EUR/USD had been moving within last week range. If it rises on top of 1.1650 the euro could gain support for an extension to the upside.
What’s next?
Volatility today remained low, and the move higher in EUR/USD came from Brexit headlines. For the rest of the week, the pair could still be influenced by Brexit comments and also by US-China trade tensions news. The key event in the Eurozone will be on Thursday with the European Central Bank meeting. “The ECB is not expected to make any big announcements on the eve of its already announced QE tapering. The message coming from Draghi and the new forecasts will likely be cautious or outright dovish, pushing the EUR/USD lower. An upbeat message has a lower probability. Inflation recently slowed down and growth is not going anywhere fast. The Turkish rate decision and US inflation can cause some distractions”, says Yohay Elam at FXStreet.
Tomorrow in the Eurozone, the ZEW Survey is due. Regarding the US, the most important economic numbers to be released are CPI and retails sales, on Thursday and Friday respectively.