- EUR / USD holds the daily range with limited gains near 1.1820.
- Industrial production in the euro area contracted 0.4% month-on-month in September.
- Lagarde, Powell and Bailey will participate in a panel discussion during the American session.
The pair EUR/USD is retreating from the 1.1820 daily high zone, although it is still remains positive near the 1.18 level at the start of the American session and before the ECB event, where Lagarde, Powell and Bailey will participate.
EUR / USD now focuses attention on the ECB event
The EUR / USD manages to recover from the weekly lows reached the previous day, around the 1.1750 region, after Monday’s rejection drop from the 2-month highs above the 1.19 level.
The US dollar is losing some bullish momentum in the second half of the week amidst the renewed concerns about the increase in new coronavirus cases and hospitalizations worldwidewhile post-news optimism about Pfizer’s effectiveness continues to fade.
The euro regains its firm tone in the second half of the week despite Lagarde’s recent pessimistic comments and other members of the ECB, hinting at the idea that there is more stimulus on the table and that risks are still sloping down.
Regarding the economic data of the euro zone, industrial production in the euro area contracted 0.4% compared to the previous month in November, which adds to the idea that the region faces a double-dip recession scenario.
Later in the day, ECB President Christine Lagarde will participate in a panel discussion with Fed Chairman Jerome Powell and BoE Governor Andrew Bailey at the ECB Forum on Central Banking.
What can we expect around the EUR?
EUR / USD remains consolidating at the lower bound of the recent range after Monday’s bearish “outer day”. In the very short term, the EUR / USD pair is expected to remain under pressure from the dollar’s dynamics coming mainly from the post-election scenario in the US and the progress of the coronavirus pandemic. On the more domestic front, the euro seems supported by upbeat results from the region’s fundamentals (despite the fact that momentum seems somewhat mitigated in several regions), although the now more pessimistic stance of the ECB suggests some caution in the bullish attempts of the pair. As usual, the euro still appears supported by the strong position of the euro area current account.
EUR / USD levels
At the time of writing, the EUR / USD pair is gaining 0.11% on the day, trading at 1.1790. A break above 1.1920 (Nov. 9 high) would target 1.1965 (Aug. 18 high) on the way to 1.2011 (Sept. 1 high). On the other hand, the next support is at 1.1709 (Fibonacci level of the 2017-2018 movement), followed by 1.1700 (100-day SMA) and finally 1.1602 (November 4 low).
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Credits: Forex Street
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