EUR/USD fades initial gains and turns negative near 1.1720
|- EUR/USD trims earlier gains and recedes to the 1.1725/20 band.
- EMU Producer Prices came in above expectations in June.
- US IBD/TIPP index, Factory Orders coming up next in the docket.
After hitting fresh daily tops in the 1.1800 neighbourhood, EUR/USD came under selling pressure pari passu with the continuation of the recovery in the greenback.
EUR/USD looks to US politics, pandemic
EUR/USD is now receding for the third consecutive session on turnaround Tuesday, always on the back of the moderate pick-up in the sentiment for the buck while at. The same time extending the leg lower from the overbought territory.
Other than developments from the unremitting pandemic and the performance of fundamentals in the region, investors keep closely watching headlines from the US political scenario, where another stimulus package aimed at helping Americans counteract the impact of the coronavirus remains the centre of the debate between Republicans and Democrats.
Later in the US calendar, Factory Orders for the month of June will be in the limelight seconded by the IBD/TIPP index and the weekly report on US crude oil supplies by the API.
What to look for around EUR
EUR/USD recorded fresh tops just above the 1.19 yardstick at the end of last week, confirming once again the solid momentum around both the single currency and the rest of its risky peers. The sharp move up, while largely triggered by broad-based dollar-selling, has found extra sustain in auspicious results from the domestic docket, in turn supporting further the view of a strong economic recovery following the coronavirus fallout. Also lending wings to the momentum around the euro, the recently clinched deal on the European Recovery Fund helped putting political fears within the region to rest (for now), while the solid position of the current account in the region adds to the rally.
EUR/USD levels to watch
At the moment, the pair is losing 0.23% at 1.1735 and faces immediate contention at 1.1695 (weekly low Aug.3) followed by 1.1495 (monthly high Mar.9) and finally 1.1448 (50% Fibo of the 2017-2018 rally). On the flip side, a breakout of 1.1909 (2020 high Jul.31) would target 1.1996 (high May 14 2018) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally).
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