Recapping Friday’s session, the EUR/USD fell from 1.1610 to 1.1535 before steadying to levels around 1.1560. It has dipped further into Monday morning trade as we open this morning Sydney time at 1.1540. The dip is likely due to German chancellor Angela Merkel’s ally party, the Christian Social Union, performing badly in the state election on Sunday and surrendering ground to both the greens and the far right AFD parties.
Looking ahead to this week’s key risk events for the Euro, we have US Retail sales on Monday which have the potential to inject further volatility into FX markets. Tuesday then delivers British labor market data in the form of average earnings for August, traders will be watching this closely for any signs of wage inflation as a predictor of future rate hikes by the BOE. Tuesday also sees CPI and trade balance figures out of Italy which are not expected to move markets. The key risk events for the week start on Wednesday as we see the EU Brexit summit kick off and CPI Eurozone CPI measures for September.
On the technical front, EUR/USD technical supports can be seen at 1.1500 whilst on the flipside, any topside moves in the pair are expected to meet resistance at levels nearer to 1.1569 before 1.1600. The EUR/GBP cross will also be in focus this week, with key resistance seen at 0.8847 and technical supports visible around 0.8700.