EUR/USD trims gains and returns to 1.1830

The single currency gives away initial gains and now drags EUR/USD back to the 1.1830 region on Friday.

EUR/USD: Bearish below 1.1880/85

EUR/USD looks to stabilize just above weekly lows in the 1.1800 neighbourhood and recedes part of the earlier advance to the mid-1.1800s, or 3-day highs. Looking at the daily chart, the short-term resistance line around 1.1880 is expected to keep limiting the bullish attempts in spot.

The mild recovery in the dollar comes in response to the mild bounce in yields of the US 10-year note to levels above 1.32%.

In addition, hawkish FOMC member L.Mester (Cleveland Fed) suggested that inflation would remain high this year, just to edge lower in 2022.

In the euro docket, German final inflation figures showed the headline CPI came in flat on a monthly basis in August and rose 3.9% from a year earlier. Inflation tracked by the broader HICP rose 0.1% MoM and 3.4% YoY. Later in the session, ECB’s Lagarde is due to speak and the EurGroup meeting is expected to kick in.

In the US, Producer Prices rose at a monthly 0.7% during last month and 8.3% from a year earlier. Core prices rose 0.6% MoM and 6.7% YoY. Later in the session, the Wholesale Inventories results will close the weekly docket.

EUR/USD levels to watch

So far, spot is gaining 0.08% at 1.1833 and faces the next up barrier at 1.1909 (monthly high Sep.3) followed by 1.1941 (100-day SMA) and finally 1.2000 (psychological level). On the other hand, a break below 1.1802 (weekly low Sep.8) would target 1.1788 (20-day SMA) en route to 1.1663 (2021 low Aug.20).