EUR/USD tumbles to weekly lows near 1.1700, focus on EU Summit

• EUR/USD loses the grip and drops to the 1.1700 area on Thursday.
• Markets’ attention will be on the EU Summit on Thursday and Friday.
• ECB’s Lagarde, US Claims, Philly Fed index next of relevance in the docket.

The single currency resumes the downside and drags EUR/USD to fresh weekly lows in the 1.1710/00 band in the second half of the week.

EUR/USD now looks to EU Summit, data

EUR/USD navigates in the area of fresh multi-day lows and gradually approaches the key support in the 1.1700 neighbourhood, always on the back of renewed demand for the buck.

In fact, the risk aversion sentiment exacerbates its presence in the early hours of the European opening following increasing restrictions in the euro region, all in response to the sharp pick up in coronavirus cases, as the second wave of the pandemic kicks in.

Also adding to the risk-off mood, discussions around an extra US stimulus package remain stalled and collaborate further with the rising uncertainty in the US political scenario with less than 20 days to the presidential elections (November 3).

In the euro docket, French final CPI for the month of September showed consumer prices contracted 0.5% MoM and stayed flat from a year earlier. in Italy, Industrial New Orders jumped more than 15% MoM in August and Industrial Sales expanded nearly 6% MoM over the same period.

Later in the session, ECB’s C.Lagarde will participate in an online CNBC Debate on the Global Economy during the IMF/World Bank Annual Meetings.

In the meantime, investors are expected to closely follow the developments from the EU Summit, where the UK-EU negotiations around Brexit are on top of the agenda.

Across the pond, attention is expected to be on weekly Claims as usual seconded by regional manufacturing gauges tracked by the Philly Fed index and the Empire State index.

What to look for around EUR

EUR/USD navigates multi-day lows and threatens to breach the key contention region in the 1.1700 area. The pair’s outlook still remains constructive, however, and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (despite momentum appears somewhat mitigated in some regions), the so far cautious stance from the ECB and the solid position of the EMU’s current account.

EUR/USD levels to watch

At the moment, the pair is losing 0.30% at 1.1709 and faces the next support at 1.1612 (monthly low Sep.25) seconded by 1.1495 (monthly high Mar.9) and finally 1.1447 (50% Fibo of the 2017-2018 rally). On the upside, a breakout of 1.1830 (monthly high Oct.9) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18).