EUR/USD reverses the downside and retakes the 1.1880 area
- EUR/USD leaves behind two consecutive daily pullbacks.
- The recent recovery looks capped just past the 1.1900 mark.
- EMU Producer Prices rose 1.4% MoM, 10.2% YoY in June.
The single currency now regains some composure and motivates EUR/USD to advance to the 1.1880/85 band on turnaround Tuesday.
EUR/USD looks to risk trends, data
EUR/USD returns to the positive territory so far after two pullbacks in a row and following the rejection from new monthly peaks further north of 1.19 the figure at the end of July.
The renewed offered stance in the dollar follows lower US yields and the disappointing results from the ISM Manufacturing for the month of July published on Monday.
in the meantime, risk appetite trends lack a clear direction and favour some side-line trading ahead of key data releases in the US later in the week.
In the euro docket, Producer Prices in the broader euro area rose at a monthly 1.4% in June and 10.2% from a year earlier.
Data wise across the pond, Factory Orders will take centre stage followe by the IBD/TIPP Index and the API’s weekly report on crude oil supplies. In addition, FOMC’s R.Clarida (permanent voter, dovish) will also speak.
What to look for around EUR
EUR/USD finally managed to surpass the key barrier at 1.19 the figure last Friday, although bulls remained unable to sustain the move. The healthy recovery in spot clearly followed the increasing weakness surrounding the dollar, which was in turn propped up by the steady stance at the Fed’s event in past days. In the meantime, dollar dynamics in response to the US economic recovery, the Fed’s dovish stance and prospects of high inflation are still expected to dictate the price action in the pair for the time being. On the euro side of the equation, the re-affirmed dovish stance from the ECB (as per its latest meeting) is expected to keep the upside limited in spot despite auspicious results from key fundamentals and the persistent high morale in the region.
Key events in the euro area this week: Final Services PMIs, EMU Retail Sales (Wednesday).
Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities in the wake of the pandemic.
EUR/USD levels to watch
So far, spot is gaining 0.12% at 1.1881 and faces the next up barrier at 1.1908 (weekly high Jul.30) followed by 1.1975 (weekly high Jun.25) and finally 1.2004 (200-day SMA). On the flip side, a breakdown of 1.1751 (monthly low Jul.21) would target 1.1704 (2021 low Mar.31) en route to 1.1602 (November 2020 low).