EUR/USD: the euro kicks off the week in the red, but the uptrend remains in place for now (Commerzbank)

The EUR/USD pair is showing a downward trend today, accentuating a correction initiated on Friday after a peak at 1.1062, after a week of upward movement.

Indeed, the dollar showed weakness throughout last week in light of concerns about US-China relations and the rise in Fed expectations of a drop in rates.

However, with a limited agreement between China and the US that was finally announced on Friday evening, the greenback has recovered, mechanically weighing down on the pair's price.

It should also be noted that last week's GBP/USD rise also supported the euro, but this factor is also no longer relevant today, as concerns about a Brexit without an agreement are resurfacing, weighing heavily on the British pound.

Technical analysis of the euro-dollar

However, the bias remains positive for the moment. Indeed, the EUR/USD is maintaining the key threshold of 1.10, and is still above two trend lines visible on the chart below, as well as above its moving averages of 100 and 200 hours.

A break below the key threshold of 1.10 will be the first serious warning that sellers could regain control of the market, especially since this threshold currently corresponds to the 100-hour moving average.

Below this, the other potential support levels are at the 200-hour moving average at 1.0980, and then at 1.0960, 1.0940, 1.09 and the annual low at 1.0880.

In case of a renewed rally, 1.1030 is the first short-term resistance level, ahead of 1.1060, followed by the psychological threshold of 1.11.

EUR/USD hourly chart

What are the statistics to watch for today?

The only significant statistic report in the economic calendar today is the euro zone industrial production figures for August, which appeared a few minutes ago: +0.4%. The consensus anticipated an increase of +0.3%, after -0.4% in the previous month.

What are the banks' forecasts for the pair?

Lastly, to conclude this daily update on the EUR/USD, let us look at one bank's short-term forecast.

According to Commerzbank, the EUR/USD could extend the recovery to the area above 1.1100:

"Last week, the EUR/USD eroded the 3-month downward trend and as the market has recently reversed upward from the base of the weekly channel to 1.0892, we expect a recovery up to the mid-September peak at 1.1110. A break above this threshold would trigger another upward wave towards the 200-day moving average at 1.1218".

"In the longer term, the critical resistance to overcome is the one-year high of the channel at 1.1396 and the 200-day moving average at 1.1353."

"Declines must be contained by 1.0990 and 1.0941 for an immediate upward bias to be maintained."