EUR/USD struggles for direction around 1.1550 ahead of ECB, data

• EUR/USD bounces off recent YTD lows, back near 1.1550.
• The ECB will publish its Accounts of the September meeting.
• German Industrial Production surprised to the downside in August.

Despite the rebound from fresh 2021 lows, EUR/USD remains under pressure in the mid-1.1500s on Thursday.

EUR/USD looks to data, risk trends

EUR/USD attempts a mild rebound on Thursday, although bulls’ aspirations bumped into the 1.1570 region, which emerged as initial resistance for the time being.

The slight recovery in the risk-linked assets follows the corrective mode in the dollar, which gives away part of Wednesday’s string advance to the boundaries of the YTD tops around 94.50.

In the fixed income space, yields of the German 10-year Bunds ease from recent tops below -0.15% and return to the -0.18% area after news on Wednesday unveiled the ECB could be planning to introduce another bond-purchase programme aimed at preventing yields from widening.

In the calendar, the German Industrial Production contracted more than expected 4.0% MoM in August. Later, the ECB will publish its accounts from the September event.

In the US data space, Challenger Job Cuts are due in the first turn seconded by the usual Initial Claims and the speech by NY Fed J.Williams.

What to look for around EUR

EUR/USD looks to put further distance from recent 2021 lows near 1.1530 amidst the entrenched bearish view on the pair and the rest of the risk complex. The firmer tone in the buck along with higher US yields and bouts of risk aversion – particularly on the debt ceiling issue - continue to undermine the performance of the risk universe, while the growth outlook appears under pressure on rising speculations that the inflation could take longer to reverse the ongoing elevated levels. In addition, the likely loss of momentum in the economic recovery, as per some weakness seen in key fundamentals, also caps the upside potential in the pair.

Key events in the euro area this week: ECB Accounts (Thursday) – German Balance of Trade (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.

EUR/USD levels to watch

So far, spot is up 0.09% at 1.1559 and faces the next up barrier at 1.1640 (weekly high Oct.4) followed by 1.1689 (20-day SMA) and finally 1.1755 (weekly high Sep.22). On the other hand, a break below 1.1529 (2021 low Oct.6) would target 1.1500 (round level) en route to 1.1495 (high Mar.9 2020).