EUR/USD sticks to gains near 1.0890

The shared currency is clinging to the positive territory so far today, with EUR/USD meandering around 1.0880/90 as the US session is under way.

EUR/USD still capped by 1.0900

The pair keeps the daily upside momentum intact at the beginning of the week, looking to recover part of last week’s deep retracement and bouncing off overnight troughs in the 1.0860 area.

The renewed offered bias around the greenback is the exclusive driver behind today’s correction, while auspicious results from October’s PMIs in Germany, France and the euro area have also collaborated with the upbeat mood.

Data wise across the pond, the Chicago Fed National Activity index has improved to -0.14 during September, while the advanced Manufacturing PMI tracked by Markit have surprised to the upside for the current month. Next of relevance will be the speech by FOMC’s J.Powell (permanent voter, neutral).

In the meantime, and despite today’s gains, the pair remains under rising pressure via a potential rate hike by the Fed at the December meeting and extreme positioning. It is worth noting that EUR net shorts have increased to the highest level since late July, with shorts back to levels last seen in early November 2014 and longs up to levels seen in January 2012.

EUR/USD levels to watch

The pair is now up 0.01% at 1.0884 facing the next resistance at 1.0952 (2014-2016 resistance line) followed by 1.1009 (7-month resistance line) and then 1.1041 (post-ECB spike Oct.20). On the other hand, a breakdown of 1.0820 (low Mar.10) would target 1.0709 (2016 low Jan.5) en route to 1.0538 (low Dec.3 2015).