EUR/USD enters Asia with 1.0950 as a cap, downside favoured to 200 DMA?

Currently, EUR/USD is trading at 1.0901, up 0.03% on the day, having posted a daily high at 1.0904 and low at 1.0897.

• Forex today: antipodeans outperform, dollar mixed, US data misses yet again

The euro has been trading around the 1.09 handle but testing the downside without follow through on the bid. Despite the US data, the dollar managed a small gain across the board in the DXY, losing out in the main to the antipodeans, yet the euro seems somewhat overdone with the French elections priced in while European markets were closed due to Labor Day.

The US data missed expectations again. The Personal income rose by 0.2% in March, missing expectations of 0.3%. The Core PCE price index fell by 0.2% and the year-on-year reading came in below previous at 1.8% vs 2.1%. The Markit Manufacturing PMI for April came in at 52.8 and the ISM manufacturing PMI came in at 54.8, below March's 57.2. Ahead of the Fed meeting, US Treasury Secretary Steve Mnuchin said that it could take up to two years to have economic growth reach 3%; it will be interesting to hear what the Fed forecast for the rest of this year, while not changes are expected to monetary policy this time around, but June could be on the cards for an additional rate hike. 

EUR/USD levels

Analysts at Commerzbank suggested that EUR/USD’s near term outlook is neutral. "The three-month resistance line, now at 1.0959, capped EUR/USD as expected with the 200-day moving average at 1.0835 still being in focus." Analysts at Scotiabank also note the cap, "The EUR’s inability to advance beyond the mid 1.09 area leaves the market vulnerable to a correction lower, we think. We do expect firm support on dips to the 1.0730/1.0830 range, however."  

Valeria Bednarik, chief analyst at FXStreet explained that the pair enters the Asian session with the 4 hours chart showing that the price keeps hovering around a horizontal 20 SMA, whilst technical indicators diverge from each other, but both stand around their mid-lines.  "The pair needs to accelerate beyond 1.0950 to be able to extend its rally past 1.1000, with further soft US data exacerbating demand for the common currency."