EUR/USD attempts a recovery post-IFO, still below 1.10
- EUR/USD breathes some respite post-German data.
- German Business Climate slightly improved in September.
- US Consumer Confidence next of relevance later in the session.
The single currency debates between gains and losses vs. the Greenback on Tuesday, with EUR/USD still parked around the 1.0990 region.
EUR/USD support emerged near 1.0970
The decline in spot appears to have run out of steam so far on Tuesday, particularly after the positive results from the German IFO.
In fact, Business Climate in Germany improved a tad to 94.6 (from 94.3) for the current month, while Current Assessment also bettered to 98.5 (from 97.4). On the soft side, Business Expectations eased to 90.8 (from 91.3).
These auspicious results gave some oxygen to the beleaguered pair, although a re-test/surpass of the critical 1.10 barrier still looks elusive amidst trade uncertainty, declining European yields and a stronger Dollar.
What to look for around EUR
EUR is facing extra downside pressure at the beginning of the week and threatens to extend the move to 2019 lows in the 1.0920 region, as any recovery in the German economy appears to take longer than expected in light of the recent flash PMIs. The unremitting slowdown in the region justifies the looser for longer monetary conditions by the ECB and adds to the probability that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.
EUR/USD levels to watch
At the moment, the pair is losing 0.03% at 1.0989 and a break below 1.0966 (low Sep.23) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017). On the flip side, the initial hurdle emerges at 1.1029 (21-day SMA) followed by 1.1109 (monthly high Sep.13) and finally 1.1163 (high Aug.26).
