- EUR/USD clinched new YTD lows near 1.17, rebounds afterwards.
- EMU final July CPI, German 30-year bond auction next on tap.
- The FOMC Minutes will grab all the attention across the pond.
EUR/USD manages to regain some composure and reverses the initial drop to new 2021 lows just above 1.17 the figure.
EUR/USD focused on data, Fed
EUR/USD returns to the positive territory after two consecutive daily pullbacks, as market participants appear to be cashing out part of the recent strong gains in the dollar.
In the meantime, the macro scenario still hovers around the advance of the delta variant of the coronavirus and the potential impact on the global recovery amidst the now slower pace of the vaccination campaign worldwide, all sustaining the investors’ shift to the safe haven universe.
Later in the domestic calendar comes in the final July inflation figures in the broader Euroland followed by a 30-year bond auction in Germany.
In the US data space, the focus of attention will gyrate around the FOMC Minutes, while weekly Mortgage Applications, Housing Starts and Building Permits are also due.
What to look for around EUR
EUR/USD extended the leg lower and recorded new lows in levels closer to the 1.17 mark earlier on Wednesday, where some contention appears to have emerged so far. The monthly leg lower in the pair comes after another failed attempt to break above the tough resistance band at 1.1880/1.1900 and follows the quite solid prospect for the dollar, which remains backed by tapering speculation. 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 EMU CPI (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 in September could bring some political effervescence to the scenario. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency.
EUR/USD levels to watch
So far, spot is gaining 0.09% at 1.1718 and faces the next hurdle at 1.1804 (weekly high Aug.13) followed by 1.1855 (50-day SMA) and finally 1.1908 (monthly high Jul.30). On the other hand, a breakdown of 1.1701 (2021 low Aug.18) would target 1.1612 (monthly low Oct.20 2020) en route to 1.1602 (monthly low Nov.4 2020).
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