EUR/USD within a tight range around 1.1920

The single currency is trading almost unchanged vs. the greenback on Wednesday, with EUR/USD hovering over the 1.1920/30 band ahead of the opening bell in Euroland.

EUR/USD looks to data, USTs

Spot is struggling to extend the positive start of the week after two consecutive daily advances and despite the softer tone from US yields, where the key 10-year benchmark dropped below 2.06% on Tuesday, levels last seen in early November.

In addition, the likeliness of a dovish tone by President Draghi at his press conference tomorrow is also limiting the upside. In fact, expectations of some announcement regarding the ECB’s QE programme (‘taper’) have drastically diminished in recent weeks due to the strong appreciation of the single currency.

In that regard, analysts at Danske Bank suggested: “The main focus at the ECB meeting is likely to be how big a problem the current pace of euro appreciation is for the ECB. We expect Mario Draghi to express concern about this and explicitly mention that the stronger euro is the main reason the ECB has lowered its inflation projection and that there is further downside risk”.

In the data space, German factory orders contracted at a monthly 0.7% in July vs. a forecasted expansion of 0.3%. In the US docket, the ISM non-manufacturing will be the salient event seconded by the publication of the Fed’s Beige Book.

EUR/USD levels to watch

At the moment, the pair is gaining 0.03% at 1.1917 and a break above 1.1940 (high Sep.5) would open the door to 1.1981 (high Sep.1) and finally 1.2069 (2017 high Aug.29). On the downside, the immediate support lines up around 1.1837 (21-day sma) seconded by 1.1823 (low Aug.31) and then 1.1753 (5-month support line).