Scotiabank’s Chief FX Strategist Shaun Osborne points out that EURUSD remains relatively unchanged, with spot levels hovering near yesterday’s closing rate. The lack of motivation to break out of current ranges can be attributed to upcoming US event risks and the highly anticipated ECB meeting on Thursday.
Recently released final August CPI data from Germany showed no change from the preliminary data, indicating a year-on-year increase of 1.9%. Market expectations are leaning towards a 25 basis points cut during Thursday’s ECB meeting, with this decision already being fully priced in. President Lagarde’s stance on further easing measures remains uncertain, adding to the market’s cautious sentiment.
Despite negative daily and weekly price signals in EURUSD over the past few weeks, the overall trend momentum still leans towards a bullish outlook. This has prevented any significant reversal in the EUR so far, keeping it well-supported in the low 1.10s. The key level to watch is 1.1040, which marks the 38.2% retracement of the August rally. A break below this level could signal a move towards the mid to upper 1.09s, while resistance is seen at 1.1075/85.
Analysis:
In summary, EURUSD is currently in a holding pattern as investors await key economic events and policy decisions. The upcoming ECB meeting and US event risks will likely dictate the next move for the currency pair. Traders should pay close attention to the 1.1040 support level and the resistance at 1.1075/85 for potential trading opportunities. As always, staying informed and monitoring market developments is crucial for making informed investment decisions in the ever-changing foreign exchange market.