EUR/USD hits fresh weekly lows and rebounds back toward 1.1000

• Euro drops across the board the day before the European Central Bank meeting. 
• EUR/USD keeps testing levels under 1.1000, but off lows. 

The EUR/USD printed a fresh daily low during the American session at 1.0983 and then bounced modestly to the upside, rising to the 1.1000 zone. The negative tone eased after hitting a fresh weekly low and also following the rebound on top of the relevant technical level of 1.0990. 

The US Dollar rose across the board over the last hours supports by higher US yields and also economic data. A higher-than-expected PPI reading for August offered a modest support to the greenback. The DXY is up 0.35%, trading at the highest level in a week. 

Euro weaker ahead of ECB 

The Euro is falling across the board, ahead of tomorrow’s ECB meeting and after consolidating for several days. Market analysts expect a rate cut, chances to forward guidance and another round of QE. 

“Our base case sees a 20bps rate cut with tiering, €40bn/m of QE, and no rate hikes until at least mid-2021. We're more comfortable with the rates view than QE, as QE will likely be a contentious decision”, said TDS analysts. The see their dovish ECB call presenting downside risks to the EUR/USD. “We think spot will be more sensitive to a large QE announcement than rate cuts as much of the expected Fed/ECB policy path differential already looks priced”. 

Levels to watch