EUR/USD looks offered below 0.9900, focus on US docket

  • EUR/USD keeps the trade close to the 0.9900 hurdle.
  • Germany Business Climate remained unchanged in October.
  • US Consumer Confidence will take centre stage later in the session.

The absence of a clear direction prevails around the European currency and prompts EUR/USD to trade with a bearish bias near 0.9860 on turnaround Tuesday.

EUR/USD focuses on risk trends, dollar

EUR/USD falters once again ahead of the key barrier at 0.9900 the figure and comes under some mild downside pressure, all against the backdrop of the equally lack of a defined trend in the dollar.

The inconclusive price action around the pair also comes in tandem with the third drop in a row in the German 10-year bund yields, which hover around the 2.25% region so far.

In the domestic calendar, there was no reaction in the pair to the release of the Business Climate gauged by the IFO Institute, which remained unchanged at 84.3 for the month of October.

Across the Atlantic, the FHFA will release its House Price Index ahead of the more relevant Consumer Confidence print measured by the Conference Board.

What to look for around EUR

EUR/USD comes under pressure following another failed attempt to test/surpass the 0.9900 mark on Tuesday.

In the meantime, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns and the Fed-ECB divergence. Following latest results from key economic indicators, the latter is expected to extend further amidst the ongoing resilience of the US economy.

Furthermore, the increasing speculation of a potential recession in the region – which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals – adds to the sour sentiment around the euro

Key events in the euro area this week: Germany IFO Business Climate (Tuesday) – France Consumer Confidence (Wednesday) – Germany GfK Consumer Confidence, Italy Consumer Confidence, ECB Interest Rate Decision, ECB Lagarde (Thursday) – France/Italy/Germany Flash Inflation Rate, Germany Preliminary Q3 GDP Growth Rate, EMU Final Consumer Confidence, Economic Sentiment

Eminent issues on the back boiler: Continuation of the ECB hiking cycle vs. increasing recession risks. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.

EUR/USD levels to watch

So far, the pair is retreating 0.02% at 0.9871 and the breakdown of 0.9631 (monthly low October 13) would target 0.9535 (2022 low September 28) en route to 0.9411 (weekly low June 17 2002). On the flip side, the next up barrier comes at 0.9899 (weekly high October 24) followed by 0.9999 (monthly high October 4) and finally 1.0050 (weekly high September 20).

 

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