EUR/USD Bounce Eyes Make-or-Break Test at 1.15

The Euro entered the new week on the offensive Monday, advancing against the Dollar and most other developed world currencies, but the FX strategy team at ING Group say the rebound will soon fizzle out.

We are on balance bullish in our outlook for EUR/USD conditional upon the exchange rate successfully breaking above a key trendline.

The Euro-to-Dollar rate outlook has dimmed further in recent days as economic and political headwinds are increasingly weighing on the single currency, leading analysts at Westpac to advocate selling the EUR/USD rate short.

The EUR/USD pair keeps knocking at the door of the circa 1.1300 hard floor, and the risks are building that it could finally break below it in the week ahead.

The Euro retreated Thursday after the U.S. Dollar staged a comeback from Wednesday's lows and the European Commission cuts it forecasts for growth in the Eurozone over coming years, citing what are mainly external factors.

The Euro-to-Dollar rate has found a floor of support following months of steep losses, according to analysts at Societe Generale, who advocated Monday that clients use the options market in order to profit from an eventual recovery by the single currency. 

The Euro-Dollar pair will likely be driven by the Dollar side of the pairing this week when eyes turn on the U.S. midterm elections which could drive the exchange rate through a key support level.

The Euro's trading range against the US Dollar has shifted lower, say analysts, and recent activity has "cemented" a new range floor at the level of the 1.13-1.1350 August and yearly lows.