Underlying Bearish Tone Remains Evident Despite Current Buoyancy

EUR/USD continued to feel the weight of the USD recovery, the rate pressed to a low of $1.1627 before it ran into decent support between $1.1630/20. A recovery in US equities, along with an easing in UST yields (some positive signs for fiscal agreement, McConnell comment on a smooth presidential transition prompted by recent remarks by Pres.Trump), allowed rate to edge up to $1.1687 but reported resistance in the $1.1690/1.1700 area was able to counter the move as rate drifted back to close around $1.1670. Asia enjoyed some mild risk positive feel though only allowed rate to consolidate between $1.1662-77. Spain PPI, EZ M3 and Italian confidence provide morning data interest. ECB Villeroy and de Cos due to speak (0800BST, 0945BST respectively). US Durable Goods provides afternoon data interest. Fed Williams speaks at two events. Despite current EUR/USD buoyancy positioning looks to have turned bearish. IMM accounts reported to have reduced longs, leveraged have increased shorts. Month-end approaching Wednesday with early models suggesting USD demand to be seen. Monday is month-end value when US corporates often emerge as USD buyers. Support $1.1630/20, $1.1600, $1.1580. Resistance $1.1690/1.1700, $1.1720, stronger into $1.1750. Weak talk has emerged of a $1.1600-1.2000 DNY option structure in play.
MNI Techs: EURUSD bears have paused for breath. The outlook remains bearish though. This week has seen the 50-day EMA cleared reinforcing a bearish threat. The Sep 1 sell-off also saw the pair slip through 1.1738, Sep 17 low confirming recent bearish signals. A trendline break drawn off the May 14 low and a head and shoulders reversal pattern both highlighted downside risk. The focus is on 1.1581 next. Initial firm resistance is at 1.1872.