EUR/USD recoils from Friday's bull run ahead of the European Manufacturing PMIs
|- Monday sees the EUR/USD backpedaling as a German political fracas disrupts traders' confidence.
- Markit PMIs and Unemployment Rates will be hitting the Euro early in the day; missed expectations will give the EUR a bad start to the week.
The EUR/USD is facing downside pressure for the new week, trading back from Friday's highs and testing into 1.1650 ahead of the next European market session.
The Euro is facing bearish pressure heading into the new week as Germany's ruling coalition party continues to fracture, with the CSU's Seehofer threatening to head for the exit doors and bring the coalition to a grinding halt if Angela Merkel's CDU doesn't make changes to current immigration agreements that have been made with other EU partner countries. The lack of unity within Germany's leading party is shaking confidence in the EUR, and traders are balking as Germany's Chancellor Merkel struggles to keep her ruling party intact.
Monday is Markit PMI day, with a range of EU countries' Manufacturing PMIs dropping today, though the key readings will be Germany's June PMI at 07:55 GMT (forecast 55.9, previous 55.9) and the broader EU PMI due at 08:00 GMT (forecast 55, previous 55).
08:00 GMT will also bring Italian Unemployment figures for May, expected to drop from 11.2% to 10.9%, while the EU-wide Unemployment Rate is expected at 09:00 GMT, and forecast to hold steady at 8.5%.
EUR/USD levels to watch
As noted by FXStreet's Chief Analyst, Valeria Bednarik, "from a technical point of view, the daily chart shows that the price remained below the 1.1720 level, where the pair topped for the week and where it also has the 23.6% retracement of the April/May slump. In the same chart, the price settled a few pips above a bearish 20 DMA, while technical indicators have recovered within negative territory, not enough to confirm further gains ahead which can happen on a clear break above the mentioned static resistance, opening doors then for a retest of the 38.2% retracement of the same decline at 1.1855. In the 4 hours chart, chances of an upward continuation are stronger, as the pair overcame its 20 and 100 SMA and closed a few pips below the 200 SMA, while the Momentum indicator aims north above its mid-line and the RSI hovers around 60. Below 1.1660, chances of an upward continuation will likely decrease, but bears will recover control with a break of 1.1620."
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