EURUSD Back Above 1.1000 On Dollar Weakness

The euro finally got a break from the bears’ advances in yesterday’s trading. EURUSD initially dropped to its five-week lows at 1.0988 before rallying to trade above the 1.1000 psychological handle. It finished the day with a 16-pip gain at 1.1020.

Data from Europe yesterday showed mixed numbers and had little to do with the shared currency’s gain.

The preliminary reading of Germany’s third quarter GDP showed that euro zone’s largest economy avoided a recession when it printed a 0.1% uptick. The consensus was for a -0.1% figure to follow the same contraction for Q2 2019. Meanwhile, the GDP report for the whole bloc came in as expected at 0.2%.

On the other hand, job growth in the euro zone missed expectations when it printed at 0.1% verse the 0.2% consensus.

It was not until the New York session when EURUSD rebounded. This bullish run was mostly due to US 10-year Treasury yields dropping to their lowest level since November 7 at 1.80%, which then caused weakness on the US dollar.

Economic data due today

Today, inflation and trade data from Europe are scheduled to be released. At 10:00 am GMT, the final reading of euro zone’s CPI for October is eyed to show a 0.7% uptick from last year. The core CPI, which excludes the price of volatile items, has been estimated higher at 1.1% from October 2018. Meanwhile, the region’s trade surplus has an 18.7 billion forecast.

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EURUSD Outlook

EURUSD has successfully broken past resistance at the falling trend line from the highs of November 8, November 11, and November 12. It’s currently consolidating above 1.1000 ahead of the reports.

Better-than-expected data could push the currency pair to test resistance at the 100 SMA around its highs for November 11 at 1.1040. The next resistance level will be at 1.1050 where it established highs in November 8.

On the other hand, further euro weakness could send EURUSD back down to its five-month lows at 1.0988. Should sellers be able to clear this level, the next support would be around 1.0955 where the currency pair hit lows in August.Download our latest quarterly market outlook for our longer-term trade ideas.

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