Euro looks bid around 1.0800 prior to ECB Lagarde

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<li><strong>The Euro rebounds from the 1.0770 region against the US Dollar.</strong></li>
<li><strong>Stocks in Europe keeps the optimism unchanged on Monday.</strong></li>
<li><strong>The bullish view in USD Index (DXY) looks limited near 104.50.</strong></li>
<li><strong>German yields add to Friday’s advance at the beginning of the week.</strong></li>
<li><strong>US markets will be closed on Monday due to Labor Day holiday.</strong></li>
<li><strong>Germany’s trade surplus shrank to €15.9B in July.</strong></li>
<li><strong>The EMU Sentix Index surprised to the downside in September.</strong></li>
<li><strong>ECB’s President Christine Lagarde to speak later in the session.</strong></li>
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<p>The Euro (EUR) regains some upside traction against the US Dollar (USD), helping <a href="https://www.fxstreet.com/currencies/eurusd" target="_blank" rel="noopener"><strong>EUR/USD</strong></a> to reclaim the area above the key 1.0800 the figure at the beginning of the week.</p>
<p>On the other hand, the Greenback meets some downside pressure and slips back to the 104.00 region when tracked by the <a href="https://www.fxstreet.com/currencies/us-dollar-index" target="_blank" rel="noopener"><strong>USD Index (DXY)</strong></a>, as investors continue to assess Friday’s mixed results from the US jobs report (+187K jobs).</p>
<p>In the meantime, bets on the Fed’s pause of its hiking campaign for the rest of the year remain firm amidst incipient speculation of interest rate cuts not before March 2024. From the ECB, uncertainty keeps running high around the potential decision on <a href="https://www.fxstreet.com/rates-charts/rates">rates</a> beyond the summer amidst market chatter around stagflation.</p>
<p>From the speculative community, net longs in the single currency shrank to levels last seen in early July during the week ended on August 29, according to the CFTC positioning report.</p>
<p><a href="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-09-04%20at%2009.54.12-638294108555647512.png" target="_blank" rel="noopener"><img decoding="async" src="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-09-04%20at%2009.54.12-638294108555647512.png" style="width: 1009;height: 657;" /></a></p>
<p>US markets will be closed on Monday due to the Labor Day holiday. The European calendar saw the German trade surplus fall to €15.9 billion in July, while the Investor Confidence gauged by the Sentix index worsened to -21.5 for the current month.</p>
<p><a href="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-09-04%20at%2011.04.22-638294150669202197.png" target="_blank" rel="noopener"><img decoding="async" src="https://editorial.fxstreet.com/miscelaneous/Screenshot%202023-09-04%20at%2011.04.22-638294150669202197.png" style="width: 697;height: 329;" /></a></p>
<p>In addition, <a href="https://www.fxstreet.com/macroeconomics/central-banks/ecb">ECB President Christine Lagarde</a> and Board members Fabio Panetta, Philip Lane, and Frank Elderson will also speak on Monday.</p>
<h2>Daily digest market movers: Euro reclaims 1.0800 and above</h2>
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<li>The EUR manages to regain part of the ground lost against the USD.</li>
<li>Trading conditions are expected to remain thin due to the US holiday.</li>
<li>Investors’ attention should shift to ECB-speak later on Monday.</li>
<li>Lower inflation, cooling labour market support the Fed’s pause on rates.</li>
<li>Markets expect the Fed to keep rates unchanged in the next few months.</li>
<li>The ECB appears divided regarding an interest rate hike later in the month.</li>
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<h2>Technical Analysis: Euro needs to clear the 200-day SMA</h2>
<p>EUR/USD picks up some pace and manages to retest the 1.0800 region, just ahead of the key 200-day SMA (1.0817).</p>
<p>Further recovery in EUR/USD is expected to target the critical 200-day SMA at 1.0817. North from here, bulls should meet last Wednesday’s top of 1.0945 ahead of the interim 55-day SMA at 1.0961, prior to the psychological 1.1000 barrier and the August 10 monthly top at 1.1064.</p>
<p>Once the latter is cleared, spot could challenge July 27 peak at 1.1149. If the pair surpasses this region, it could alleviate some of the downward pressure and potentially visit the 2023 peak of 1.1275 seen on July 18. Further up comes the 2022 high at 1.1495, which is closely followed by the round level of 1.1500.</p>
<p>The resumption of the downward bias could motivate the pair to initially revisit the August 25 low of 1.0765. The breach of this level exposes the May 31 low of 1.0635, prior to the March 15 low of 1.0516 and the 2023 low at 1.0481 seen on January 6.</p>
<p>Furthermore, sustained losses are likely in EUR/USD once the 200-day SMA is breached in a convincing fashion.</p>
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<h2>ECB FAQs</h2>
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<p>The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region.<br />The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa.<br />The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.</p>
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<p>In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.<br />QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.</p>
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<p>Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.</p>
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<br /><a href="https://www.fxstreet.com/news/euro-generates-traction-and-reclaims-10800-looks-at-ecb-speak-202309040754">Source link </a></p><p>The post <a href="https://forextraderhub.com/euro-looks-bid-around-1-0800-prior-to-ecb-lagarde.html">Euro looks bid around 1.0800 prior to ECB Lagarde</a> first appeared on <a href="https://forextraderhub.com">Forex Trader Hub</a>.</p>