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EUR Rallying into Month End
EURUSD is today attempting to get back above the 1.0503 level, which could help build the platform for a further rebound, if seen. USD has come under heavy selling pressure this week with some attributing the move to month-end rebalancing following a solid USD run amidst Trump’s re-election success. In a note issued today, Deustche Bank points to a recent trend of weaker corporate demand for USD into month end, while also noting that its month-end rebalancing models point to large demand signals in EURUSD and supply signals in USDCHF. The need for heavy portfolio rebalancing against relative equity performance this month should keep USD pressured into next week.
US Data on Watch
Looking ahead, there is plenty of key US data to watch this week that will also help shape price action in EURUSD. Later today, we have the US CB consumer confidence number, Richmond manufacturing and the FOMC minutes. The latter will of course be the key focus and while there are hawkish risks into the meetings, given the recent strength in USD, any dovish details might help amplify current Dollar selling. Looking ahead, we then have US advanced GDP, durable goods, and core PCE tomorrow, along with weekly jobless claims. Any weakness in these readings should prove negative for USD near-term, while it would likely take a strong upside surprise or a sea of green to help bolster the Dollar.
Technical Views
EURUSD
The sell off in EURUSD has stalled for now into the 1.0365 level. Price has bounced firmly and is now attempting to get back above the 1.0515 level. Back above here, focus will turn to a test of 1.0724 and the bear channel highs. Downside, 1.0365 remains key support.
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