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EUR/USD: The Spot Has Opened The Door For A Potential Visit To Yearly Lows

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EUR/USD: The Spot Has Opened The Door For A Potential Visit To Yearly Lows
  • EUR/USD moves around the vicinity of the 1.1200 neighborhood.
  • Extra rangebound at current levels is not ruled out ahead of ECB.
  • Cautiousness is seen picking up pace ahead of potential ECB easing.

The inconclusive price action is prevailing around the European currency at the beginning of the week, meandering the proximity of 1.1200 the figure in the wake of Friday’s sharp drop.

EUR/USD is expected to remain under heavy pressure particularly this week, as the ECB could announce a new wave of monetary stimulus at its meeting on Thursday, including the likelihood of rate cuts, the resumption of QE and changes to the bank’s forward guidance.
On the buck-side, speculations of a smaller rate cut by the Fed, namely a 25 bps ‘insurance cut’, remain firm and have relegated the possibility of a larger cut, say 50 bps, after recent comments by FOMC’s Bullard (“…a 25 bps rate cut seems appropriate…”) and Rosengren, who actually does not see a rate cut as necessary.

Moving forward, and other than the ECB gathering, advanced PMIs in core Euroland will be another important driver to pay close attention to amidst the unremitting slowdown in the euro area.

EUR/USD, then, faces a tough hurdle at the 1.1280/90 band. Further north emerges the critical 200-day SMA at 1.1315 and considered the last defense for a potential visit to June peaks near 1.1420. On the downside, the 1.1181/76 band remains a key magnet for sellers ahead of 2019 lows in the 1.1100 neighborhood.

Image Sourced by Pixabay

Posted-In: EUR/USD European UnionNews Eurozone Forex Global Markets General

 

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