EUR/USD looks to 1.1600 post-Eurozone Sentix
- Bulls extend control, despite a dip in the Eurozone September Sentix investor confidence.
- Monetary policy divergence, trade worries to keep the corrective upside capped.
The bulls are in charge in the European session, propelling the EUR/USD pair to take-out the 20-DMA barrier located at 1.1573, as they await fresh impetus for further upside targets.
EUR/USD: Further downside likely in play?
The spot is trying hard to take on the recovery from fresh three-week lows of 1.1526 reached in early Europe, as the US dollar appears to have found some support across its main competitors, after having witnessed a sharp corrective drop from three-day tops at 95.56.
Meanwhile, downbeat Eurozone Sentix investor confidence data could also add weight on the common currency. The Eurozone Sentix investor confidence arrived at 12.0 in September versus 14.3 expected.
From a broader perspective, the major remains exposed to further downside risks, as the monetary policy divergence between both the continents is back in play after Friday’s solid US NFP data suggests a faster pace of Fed tightening in the coming months. Meanwhile, the ECB is not expected to hike the deposit rate until mid-2019 and keep the QE programme unadjusted until end-2018.
Further, the greenback will continue to derive support from ongoing trade tensions between the US and China, as the US readies to impose higher tariffs on USD 200 billion worth of the Chinese imports.
With the Eurozone data out of the way, looking ahead, the USD dynamics will remain the key driver for the pair, in absence of any economic release from the US docket today.
EUR/USD Technical Analysis
According to Slobodan Drvenica at Winsor Brokers, “Bears pressure initial support at 1.1517 (50% of 1.1300/1.1733 / daily Kijun-sen), with weekly 100SMA (1.1483) and Fibo 61.8% (1.1466), coming in focus. Corrective upticks would be seen as positioning for fresh weakness, with broken 55SMA (1.1612) expected to cap. Res: 1.1568; 1.1600; 1.1626; 1.1649. Sup: 1.1517; 1.1483; 1.1466; 1.1400.”