- EUR/USD bounces off new 2021 lows near 1.1590.
- The upside in the dollar seems to be taking a breather.
- German flash CPI will be the salient event in the euro docket.
The downside pressure in the single currency appears somewhat mitigated as EUR/USD manages to retake the 1.1600 neighbourhood so far on Thursday.
EUR/USD looks to the dollar, risk trends
After four consecutive daily declines (and four weekly drops in a row so far), the sharp selloff in EUR/USD appears to have met some initial contention in the 1.1590 region for the time being.
Indeed, the rally in the greenback seems to have entered into an impasse considering the recent needle-like spike higher and the eventual overbought conditions in the US Dollar Index (DXY).
No news from ECB’s Lagarde at her debate with central bank peers at the Forum in Sintra on Wednesday after she expects the economy to return to pre-pandemic levels by year-end. She also reiterated that uncertainties still persist while she sees supply bottlenecks easing in H1 2022.
Earlier in the session, the German Unemployment Rate stayed put at 5.5% in September while the Unemployment Change shrank by 30K this month. Still in Germany, the preliminary inflation figures for the month of September are due later. Further data will see the jobless rate in the broader Euroland during August.
Across the Atlantic, final Q2 GDP readings are due seconded by usual weekly Claims, the Chicago PMI and speeches by FOMC’s Williams, Bostic and Harker.
What to look for around EUR
EUR/USD remains under heavy pressure despite Thursday’s mild bullish attempt, which might as well be a technical rebound following Wednesday’s sharp drop to the sub-1.1600 area and therefore entering the oversold territory. In the meantime, dollar dynamics, occasional bouts of risk aversion and higher yields continue to keep the pair under scrutiny for the time being. In the euro region, the likely loss of momentum in the economic recovery, as per some weakness seen in key fundamentals, continues to undermine the mood around the shared currency.
Key events in the euro area this week: German labour market report, German September flash inflation figures (Thursday) – German Retail Sales, final August PMIs, EMU preliminary inflation figures (Friday).
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. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.
EUR/USD levels to watch
So far, spot is gaining 0.05% at 1.1603 and faces the next up barrier at 1.1755 (weekly high Sep.22) seconded by 1.1774 (55-day SMA) and finally 1.1845 (weekly high Sep.14). On the other hand, a break below 1.1589 (2021 low Sep.29) would target 1.1572 (200-week SMA) en route to 1.1495 (high Mar.9 2020).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges higher toward 1.0850 on renewed USD weakness
EUR/USD gains traction and rises toward 1.0850 in the second half of the day. Disappointing private sector employment data from the US weighs on the US Dollar and helps the pair push higher ahead of the Federal Reserve's policy announcements.
USD/JPY extends sell-off to 150.00 on BoJ's hawkish hike
After spiking toward 154.00 in a knee-jerk reaction to the Bank of Japan's (BoJ) unexpected 15 bps rate hike, USD/JPY remains offered toward 150.00, with the sell-off intensified after Governor Ueda said that they will keep raising rates and adjust the degree of easing.
Gold price jumps above $2,400 on Middle East woes, hopes of dovish Fed
Gold price (XAU/USD) exhibits a strong performance in Wednesday’s European session, with investors focusing on the Federal Reserve’s (Fed) monetary policy outcome later the day.
Bitcoin price retraces to the $66,000 mark despite whales accumulating BTC
US Spot Bitcoin ETF experienced inflows of 2,129 BTC worth $140.33 million. A whale withdrew 1,300 BTC valued at $85.56 million from Binance on Wednesday.
Federal Reserve Preview: All eyes on clues about the Fed's first interest rate cut in four years
The US Fed will announce monetary policy decisions following the July 30 - 31 policy meeting on Wednesday. Market participants widely anticipate that the US central bank will leave the policy rate unchanged at 5.25%-5.5% for the eighth consecutive meeting.