- EUR/USD adds to the weekly uptick around the 1.0150 region.
- The greenback remains offered amidst persistent risk on trade.
- EMU, Germany ZEW Economic Sentiment, US CPI all due later.
The optimism around the European currency remains unchanged and lifts EUR/USD back to the 1.0150 zone on turnaround Tuesday.
EUR/USD remains bid ahead of EMU, US results
EUR/USD advances for the third session in a row and extends the auspicious start of the week well north of the parity level, always against the backdrop of the resolute selling pressure around the dollar.
As investors practically digested the latest ECB gathering and with a ¾ point interest rate hike by the Fed practically priced in, market participants now look to the upcoming key data releases to determine the pair’s price direction in the next sessions.
On that, the Economic Sentiment gauged by the ZEW institute is due later in Germany and the broader Euroland for the current month, while US inflation figures tracked the CPI will gather all the attention later in the NA session. Earlier on Tuesday, Germany’s final CPI rose 0.3% MoM and 7.9% in the year to August.
What to look for around EUR
EUR/USD keeps the bid bias unchanged so far this week and aims at revisiting Monday’s peaks in the 1.0200 zone sooner rather than later.
So far, price action around the European currency is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.
On the negatives for the single currency emerge the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment gauges as well as an incipient slowdown in some fundamentals.
Key events in the euro area this week: Germany Final Inflation Rate, Germany/EMU ZEW Economic Sentiment (Tuesday) – EMU Industrial Production (Wednesday) – France Final Inflation Rate, EMU Balance of Trade (Thursday) – Italy, EMU Final Inflation rate (Friday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of its monetary conditions. Impact of the war in Ukraine and the persistent energy crunch on the region’s growth prospects and inflation outlook.
EUR/USD levels to watch
So far, the pair is advancing 0.24% at 1.0144 and now faces the initial barrier at 1.0197 (monthly high September 12) followed by 1.0202 (August 17 high) and then 1.0333 (100-day SMA). On the flip side, the breakdown of 0.9863 (2022 low September 6) would target 0.9859 (December 2002 low) en route to 0.9685 (October 2002 low).
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
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