• We expect the European Central Bank to leave the policy on hold,
  • EURUSD catalysts are US macroeconomic data.

The euro jumped against most of the traded currencies on Monday. Traders are watching crucial upcoming event ECB meeting on Thursday. Flipside the dollar took a back foot on Monday, the 10-year Yield edged higher to 2.94%.

Data review:

The sentix overall index for the economy in the EZ fell from 14.7 to 12.0 points in September.

Data preview:

We expect the ECB remains on hold and remains data dependent; thus it will be uneventful. ECB meeting on 13 September 2018. At 13:45 CEST, followed by a press conference at 14:30 CEST.

“We think that the ECB is in the process of engineering a very slow policy shift.” Morgan Stanley said in a note to clients.

EURUSD has fallen by around 1.5% relative to its level at the July policy meeting review.

US: Last week’s upside surprise from ISM print and better than NFP reading keeping the US momentum steady and lift dollar. Turning to the weekly economic data, we see PPI (wed), CPI (Thu) and Retail sales (Fri).

We expect August CPI to increase 0.2% vs. 0.2%.

FX Overview

EURUSD closed sharply higher on Monday, on the daily chart. The key support level is placed at 1.1530/1.1525 followed by 1.1500 and 1.1460. If the price action started moving upwards, key resistance levels to watch out are 1.1615 and 1.1660.

A break above the second resistance 1.1660 needed to initiate a strong recovery to 1.1730 and 1.1790.

The daily studies RSI is below 50.00, and the oscillator is remaining bearish. Under these conditions, a recovery back above 1.1730 still seems difficult this week.

Forecast: The price EURUSD action may have contained within the 1.1730-1.1460 range.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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