The common currency struggles for direction on Tuesday after a decent drop at the start of the trading week. EURUSD has encountered a local resistance in the 1.1180 area once again and was rejected from this level which is standing on the way to 1.12.
On the data front, Eurozone September PPI recovered by 0.1% on a monthly basis as expected after a -0.5% contraction in the previous month. Meanwhile, the annual PPI clumped to -1.2% from -0.8% in August, also in line with market expectations. The euro was nearly unfazed by the report as September figures are looking outdated already and came as expected.
In general, the euro is now more affected by dollar dynamics. The resurgent USD demand on Monday weighed the currency. Now, as the greenback shows some signs of a waning bullish momentum, the pair is making some upside attempts. However, as the technical picture shows, the single currency still lacks the directional impetus despite a fairly high intraday volatility these days.
In part, EURUSD struggles to stage more sustained gains amid a rise in the US Treasury bond yields amid positive comments on the US-China trade front, indicating that a partial deal could be signed later this month.
Despite the pair so far manages to hold above the 1.11 figure, it remains depressed in the daily charts, clinging to the lower end of its local trading range. Moreover, downside risks still prevail as long as the euro stays below the key 1.12 handle, where the 200-DMA lies. As such, bulls will hardly dare to start positioning for further upside move unless they see a sustained move above the 1.1180 zone. Once above, 1.12, EURUSD could extend the upside momentum towards the 1.1230 intermediate resistance on the way to the 1.13 barrier.
During the course of the next few days, the common currency will further follow trade developments and fresh economic updates including service PMIs. German data will be in focus as the largest Eurozone economy is now on the verge of a recession. So poor European figures could serve as a catalyst for a more directional bearish move this week.