EUR/USD remains largely trapped between 1.1700 and 1.1800 in October
And the longer the pair struggles to find firmer direction between 1.1700 and 1.1800, I am more inclined to argue against the euro than in favour of the single currency amid recent economic developments in the region.
For one, euro area inflation is going nowhere and the threat of deflation pressures may very well call for the ECB to take action in the coming months - likely December.
Secondly, the worsening virus situation is starting to weigh on the recovery prospects in the region with a possible "double-dip recession" a possibility to consider.
In August, the euro was the poster child of the major currencies bloc but here we are now.
Looking at the EUR/USD chart, the near-term bias continues to stay more bearish for the time being as price action keeps below both key hourly moving averages.
The 100-hour MA (red line) sits nearby @ 1.1731 so that will be one to watch in the session ahead but in my view, the range of 1.1700 and 1.1800 tells more of the story.
The pair needs a firm break on either side to establish firmer direction but amid recent developments in the euro, one can argue that selling on rallies closer to 1.1800 remains favourable in the lead up to the US election in November.
In that lieu, the dollar side of the equation also presents an interesting situation with the greenback largely reacting to changes in risk sentiment i.e. stimulus hopes.
To start the week, stocks are looking good and that may well weigh on the dollar a little in the session ahead but given how a pre-election deal on stimulus is unlikely, that could come back to bite at risk assets later on in the week i.e. underpin the dollar.
What comes after the election may be a different story but for now, the case of EUR/USD seems to be that buyers are starting to see the euro glow fade from two months ago - exemplified by price action being trapped between 1.1700 and 1.1800.
