EUR/USD sell-off meets contention near 1.1700

• EUR/USD loses further ground and drops to the vicinity of 1.17.
• Coronavirus concerns underpin the risk-off sentiment among traders.
• Investors expect a dovish message from the ECB on Thursday.

The persistent bias towards the safe haven universe drags EUR/USD to the important area of contention near the 1.1700 level on Wednesday.

EUR/USD looks cautious ahead of the ECB event

A combination of cautious trade ahead of the ECB monetary policy meeting (on Thursday) and rising concerns over the advance of the pandemic in Europe is taking a toll on the single currency and the rest of its risk-associated peers on Wednesday.

The pick-up in the risk aversion comes in tandem with the implementation of tighter restriction measures across the Old Continent in order to slow down the spread of the coronavirus, which has reached unprecedented levels in many countries already.

Earlier in the euro docket, France’s Consumer Confidence came in above consensus at 94 for the month of October. In Germany, Import Prices surprised to the upside and rose 0.3% MoM in September and contracted 4.3% from a year earlier.

In the NA session, September’s advanced trade deficit is expected to shrink to $79.37 billion while Mortgage Applications expanded 1.7% WoW.

What to look for around EUR

EUR/USD loses momentum and retests the 1.1750 region against the backdrop of a persistent inflows into the safe haven universe. The outlook on EUR/USD remains positive, however, and bearish moves are deemed as corrective only. Further out, the positive bias in the euro remains underpinned by auspicious results from domestic fundamentals (despite momentum appears somewhat mitigated in several regions), the so far cautious stance from the ECB and the solid position of the EMU’s current account. In addition, the probable “blue wave” following the US elections is deemed as a negative driver for the greenback and carries the potential to lend extra legs to the pair in the longer run.

EUR/USD levels to watch

At the moment, the pair is losing 0.50% at 1.1736 and faces the next support at 1.1688 (monthly low Oct.15) followed by 1.1612 (monthly low Sep.25) and finally 1.1495 (monthly high Mar.9). On the other hand, a breakout of 1.1880 (monthly high Oct.21) would target 1.1917 (high Sep.10) en route to 1.1965 (monthly high Aug.18).