EUR/USD looks firmer and targets 1.1700, looks to data, US politics

• EUR/USD adds to Monday’s gains in the 1.1680 region.
• EMU’s final Consumer Confidence came in at -13.9 in September.
• US Consumer Confidence, Trade Balance, Fedspeak next of relevance

The single currency keeps the buying bias unchanged in the first half of the week and now pushes EUR/USD to daily highs in the 1.1680/85 band.

EUR/USD focused on data, USD

EUR/USD advances for the second consecutive session so far on turnaround Tuesday, looking to put further distance from last week’s 2-month lows near 1.1610.

In fact, the selling pressure appears to have returned to the buck so far this week, lending the risk-associated galaxy some respite in light of last week’s strong bounce in the risk aversion.

The rebound in the pair comes despite the dovish tone from ECB President Christine Lagarde on Monday before the European Parliament. Lagarde left the door open to further stimulus in light of what she considers the recovery in the region to be “incomplete, uncertain and uneven”. Furthermore, Lagarde reiterated that the ongoing pandemic poses downside risks to the growth outlook and put extra downside pressure on consumer prices.

Data wise in Euroland, the final Consumer Confidence gauge tracked by the European Commission (EC) came in at -13.9 for the month of September while the Economic Sentiment bettered to 91.1 for the same period. Later in the session, German preliminary inflation figures for the current month are also due. Lagarde is due to speak again on Wednesday, this time at the ECB and its Watchers XXI Conference in Frankfurt.

Across the pond, the focus of attention will be on the presidential debate between President Donald Trump and Democrat candidate Joe Biden. In the data space, the Conference Board will publish its always-relevant Consumer Confidence measure. Further data will see the S&P/Case-Shiller Index, advanced Trade Balance results and speeches by New York Fed John Williams (permanent voter, centrist) and Philadelphia Fed Patrick Harker (voter, hawkish).

What to look for around EUR

EUR/USD is looking to extend the rebound from 2-month lows in the 1.1610 region so far this week. Despite the move, the pair’s outlook still remains constructive and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (which have been in turn supporting further the view of a strong economic recovery after the slump in the activity during the spring), the so far calm US-China trade front and the steady – albeit vigilant- stance from the ECB. The solid position of the EMU’s current account coupled with the favourable positioning of the speculative community also lends support to the shared currency.

EUR/USD levels to watch

At the moment, the pair is advancing 0.13% at 1.1678 and a breakout of 1.1709 (38.2% Fibo retracement of the 2017-2018 rally) would target 1.1759 (55-day SMA) en route to 1.1917 (high Sep.10). On the flip side, immediate contention is seen at 1.1612 (monthly low Sep.25) seconded by 1.1495 (monthly high Mar.9) and finally 1.1447 (50% Fibo of the 2017-2018 rally).