EUR/USD off lows, near 1.1860 post-ADP

• EUR/USD trims earlier losses and rebounds to the 1.1860 area.
• US ADP report came in well below expectations in August.
• Fedspeak, US Factory Orders, Fed’s Beige Book next on tap.

After a drop to multi-day lows in the 1.1850/45 band, EUR/USD managed to regain some composure and is now flirting with the 1.1860 zone.

EUR/USD stays offered on dollar bounce

EUR/USD is adding to Tuesday’s losses below the 1.19 mark and after clinching fresh 2020 highs in the area just above the psychological 1.20 the figure, levels last seen in May 2018.

The single currency managed to bounce off lows after the US private sector created “just” 428K jobs during august, badly missing expectations albeit more than doubling July’s readings (212K).

Further weakness around the euro can be found today in response to poor prints from German retail sales, while latest figures from the Spanish labour market show a nearly 30K increase in the unemployment change.

In the US calendar, next of note will be July’s Factory Orders seconded by the EIA’s weekly report and the Fed’s Beige Book.

What to look for around EUR

EUR/USD broke above the multi-day rangebound theme last week and managed to test the area just above 1.20 the figure on Tuesday. In the meantime, the sell-off in the dollar gives extra legs to the rally that started in July, all accompanied by the improved sentiment in the risk-associated universe, auspicious results from domestic fundamentals - which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis – as well as US-China positive headlines. Also lending wings to the momentum around the euro appear the deal on the European Recovery Fund – which helped putting political fears within the bloc to rest (for now) – and the solid position of the current account in the region. In addition, the speculative community has supported the bullish stance on the euro for yet another week (as per the latest CFTC positioning report).

EUR/USD levels to watch

At the moment, the pair is losing 0.47% at 1.1857 and faces the next support at 1.1845 (weekly low Sep.2) followed by 1.1772 (weekly low Aug.26) and finally 1.1754 (weekly low Aug.21). On the upside, a move above 1.2011 (2020 high Sep.1) would target 1.2062 (23.6% Fibo of the 2017-2018 rally) en route to 1.2413 (monthly high Apr.2018).

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