- EUR/USD has quickly rebounded after testing sub-1.09 levels.
- ECB’s Lagarde defended the current monetary stance.
- Powell’s testimony coming up next on the docket.
After printing new 2020 lows in the 1.0890 region, EUR/USD has managed to regain some traction and re-test the upper end of the daily range in the 1.0915/20 band.
EUR/USD mildly bid ahead of Fed’s Powell
The pair seems to have met some decent support in the 1.0890/1.0900 region so far this week following six consecutive daily pullbacks.
The current rebound in the spot is also sponsored by oversold levels as per the daily RSI (29.7), although its extension remains highly debatable at least in the near-term horizon.
EUR remained largely apathetic after ECB’s C.Lagarde failed to ignite a change of heart around the shared currency at her testimony before the European Parliament. In fact, Lagarde defended the current ‘wait-and-see’ stance from the central bank, although she (followed Draghi and) advocated for other policies to step in (and collaborate with recovery in the region).
In addition, Lagarde argued that the slowdown in the bloc has emerged nearly 2 years ago and mainly in response to uncertainties overseas and gloomy prospects on the trade front.
Later in the session, the buck should be in centre stage in light of Powell’s testimony before the House Financial Services Panel.
What to look for around EUR
The pair has intensified the downside in past hours and is now trading closer to the 2019 low in the 1.0880 region. As usual, dynamics around the buck are expected to remain the exclusive driver of the pair’s price action for the time being along with alternating risk appetite trends in response to developments from the Wuhan coronavirus and the US-China trade scenario. On another front, the ECB is expected to finish its “strategic review” (announced at its January meeting) by year-end, leaving speculations of any change of the monetary policy before that time pretty flat. Further out, some better-than-expected results in the euro region as of late seem to have lent support to the idea that the bloc could have left the worst behind, although that view looks premature, to say the least.
EUR/USD levels to watch
At the moment, the pair is gaining 0.06% at 1.0917 and faces the next resistance at 1.0998 (10-day SMA) seconded by 1.1064 (100-day SMA) and finally 1.1094 (weekly high Jan.31). On the other hand, a break below 1.0891 (weekly/2020 low Feb.11) would target 1.0879 (2019 low Oct.1) en route to 1.0569 (monthly low Apr.10 2017).