• The Euro appears mildly offered vs. the US Dollar.
• Stocks in Europe open Tuesday’s session with marked gains.
• EUR/USD hovers around the 1.0550 region on Tuesday.
• The USD Index (DXY) clings to daily gains above 106.00.
• The ECB’s Christine Lagarde speaks later in the session.

The Euro (EUR) adds to the weakness seen at the beginning of the week against the US Dollar (USD), resulting in a decline of EUR/USD to the 1.0550 region so far on Tuesday.

In contrast, the Greenback is regaining lost ground and manages to bounce off earlier lows near 105.90 when tracked by the USD Index (DXY), all against the backdrop of persistent geopolitical effervescence in the Middle East and the subsequent pick up in the risk aversion.

Regarding monetary policy, investors currently anticipate that the Federal Reserve (Fed) will maintain interest rates at their present levels for the remainder of the year. Simultaneously, there is ongoing speculation in the market regarding the potential for the European Central Bank (ECB) to pause its policy adjustments, despite inflation levels surpassing the bank's target and mounting concerns about the possibility of a future recession or stagflation in the European region.

On the euro docket, ECB’s President Christine Lagarde will speak at the IMF/World Bank meetings.

In the US, the NFIB Business Optimism index is due seconded by Wholesale Inventories and speeches by Atlanta Fed Raphael Bostic (2024 voter, hawk), FOMC Governor Christopher Waller (permanent voter, hawk) and Minneapolis Fed Neal Kashkari (voter, centrist).

Daily digest market movers: Euro appears on the defensive amidst risk-off mood

• The EUR adds to Monday’s decline vs. the USD.
• US and German yields attempt a tepid rebound so far.
• Investors believe the Fed will hold off on hiking rates in the coming months.
• Markets anticipate that the ECB will halt its rate rise campaign.
• Escalating concerns around the Middle East support the risk-off trade.
• Speculation of USD/JPY FX intervention remains strong.

Technical Analysis: Euro’s upside looks limited around 1.0600

EUR/USD adds to the pessimism seen at the beginning of the week and revisits the 1.0550 zone on Tuesday.

The persistence of selling pressure on the EUR/USD could lead to a retesting of the 2023 low at 1.0448 (October 3) and may even challenge the significant psychological level of 1.0400. Should this level be breached, it could open the door for a retest of the weekly lows at 1.0290 (November 30, 2022) and 1.0222 (November 21, 2022).

On the other hand, if the pair gains upside impulse, its next target could be the 1.0617 (September 29), followed by the important 200-day SMA at 1.0823. If the latter is breached, there's potential for the pair to test the weekly top at 1.0945 (August 30) and approach the psychological barrier of 1.1000. Further breakthroughs beyond the August peak of 1.1064 (August 10) might bring the pair to the weekly high of 1.1149 (July 27) and potentially reach the 2023 top at 1.1275 (July 18).

Nevertheless, it's crucial to keep in mind that as long as the EUR/USD remains below the 200-day SMA, there is the possibility of continued downward pressure